Vanuatu: Offshore Business Sectors
Banking in Vanuatu is regulated by the Banking Act Cap 63 and the Reserve Bank of Vanuatu Act Cap 125. Until 2002 the licensing of banks was carried out by the Financial Services Commission; but in that year, in response to international pressure to control money-laundering, a revised International Banking Act was passed which handed the licensing responsibility to the National Reserve Bank.
Banks in Vanuatu need to be incorporated under the Companies Act, since International Companies are not permitted to engage in banking activity, although they can hold the shares of a company that does.
Banks operating domestically would normally use a 'local' limited company, and are called 'local' banks, while offshore (external) banks would normally use an exempted company and are called 'exempted' banks (see Forms of Company).
There are two types of license: a Financial Institution License permits most banking activities other than the operation of chequeing accounts, while a Banking Licence includes chequeing activity. An exempted bank is not normally allowed to offer chequeing, however, so the two types of license are operationally equivalent, except that a Banking Licence includes (and obliges) use of the word 'bank' in the institution's name. See Law of Offshore for more details of the licensing process and regulatory regime.
More than 100 exempted banks were registered in Vanuatu in 2002, making it the leading offshore banking centre in the Eastern hemisphere; only a few banks provide services locally, including ANZ, Westpac, the National Bank of Vanuatu, and the Bank of Hawaii. The Asian Development Bank has its Pacific regional office in Port Vila. The 2002 Banking Act however led to a considerable reduction in the number of licensed banks - by mid 2005, only four domestic banks and a mere six international banks remained. In the two years prior to this, 28 banks had departed or been closed down. At the end of 2011, seven exempt banks held licenses in Vanuatu.
The annual fee for a Banking Licence or a Financial Institution Licence is USD55,000 (at the time of writing).