IoM Alternative Banking Regime Now Law
by Jason Gorringe, Lowtax.net, London
02 August, 2016
The Isle of Man's new Alternative Banking Regime came into operation on August 1, 2016.
According to the Financial Services Authority, the aim of the regime is to address a decline in traditional offshore banking by creating a "non-retail" banking regime to sit alongside existing retail deposit-takers.
The new regime creates two additional categories of banking licence by splitting the existing Class 1 licence into three sub-classes.
The new Class 1(1) licence – non-restricted (including retail) deposit takers – applies to licensees providing services to the full spectrum of customers. This class covers existing Class 1 licence holders.
The new Class 1(2) licence – restricted (including non-retail) deposit takers – applies to licensees providing services to corporates and a very limited class of individuals. This licence applies to wholesale, private, or merchant bank deposit takers.
The new Class 1(3) licence – representative offices of foreign banks – applies to an office (branch) of a foreign bank that wishes to have a presence in the Isle of Man for marketing and business development purposes. Class 1(3) licensees are not allowed to undertake any transactions.
The implementation of the new Alternative Banking Regime was initially suggested and consulted upon by the Isle of Man Government's Department of Economic Development in May 2015. The Isle of Man Financial Services Authority then issued a discussion paper on outline proposals in January 2016 and a consultation document to show the detailed proposals, including draft legislation and license conditions.
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