Obtain a Restricted Banking Licence in the Cayman Islands

Obtaining a restricted banking licence in the Cayman Islands means creating a regulated financial institution for working with a predefined circle of clients, international settlements and intra-group operations in a well-known offshore financial jurisdiction. The Restricted Class B Banking Licence is issued by CIMA — the Cayman Islands Monetary Authority. This regime is not intended for the mass attraction of clients and the retail market. A restricted banking licence in the Cayman Islands is obtained by financial groups, holdings, family offices and foreign financial institutions that need a controlled instrument for a limited circle of persons.

Obtaining a Restricted Banking Licence in the Cayman Islands: the Particularities of the Regime

The Restricted Class B Banking Licence is a banking permit for international activity with a restriction on the list of clients. Such a regime differs in that the applicant determines in advance the persons with whom the bank will work.

The obtaining of a restricted banking licence in the Cayman Islands does not make it possible to freely attract clients from the open market. Together with the application, a special undertaking is submitted, according to which the bank will not receive funds from persons absent from the agreed list. It is precisely for this reason that this regime is usually used as a specialised structure under a specific financial model.

Whom the Obtaining of a Restricted Class B Banking Licence in the Cayman Islands Is Suitable For

The Restricted Class B is used where a regulated banking instrument for a limited circle of participants is needed. The registration of a Cayman restricted financial-services licence may be suitable for:

• a banking structure within an international group of companies;

• the servicing of connected legal entities;

• a model of private servicing with predefined clients;

• a division of a foreign financial institution;

• a settlement or deposit scheme without the mass attraction of funds;

• a family office with banking functionality;

• intra-group lending and liquidity management.

Obtaining a Category B Restricted Banking Licence in the Cayman Islands: the Criteria for the Applicant

When arranging a Cayman category B restricted bank licence, CIMA assesses the capitalisation, the business reputation of the owners, the transparency of the structure, the origin of the funds, the management experience and the possibility of effective supervision.

The Minimum Capital

For obtaining a restricted licence for the provision of banking services in the Cayman Islands, the minimum own capital is established at the level of 20,000 KYD (24,000 USD). The amount may be contributed in the equivalent of another currency. The regulator is entitled to establish a higher volume of capital if the anticipated activity is connected with a heightened risk, large obligations towards clients or a complex structure of assets. Additionally taken into account are:

• the volume of the anticipated operations;

• the composition of the client base;

• the geography of the activity;

• the sources of financing;

• the stability of the group of companies.

Directors, Controlling Persons, Shareholders

CIMA checks the persons who directly or indirectly influence the activity of the bank. For arranging a restricted banking permit in the Cayman Islands, the following are usually required:

• a personal questionnaire;

• two professional recommendations;

• a financial recommendation from a bank or a trust organisation;

• a certificate of the absence of a criminal record;

• information about the business reputation;

• information about experience of working in the banking sector;

• data about the owners of a substantial participation.

The regulator expects the presence of a minimum of two effective directors. At least one of them must confirm practical experience in the banking sphere.

The Fit and Proper Check

Fit and proper is an assessment of the business reputation, the professional suitability and the financial stability of a person. When reviewing an application for obtaining a restricted banking licence of the Cayman Islands, CIMA analyses:

• honesty and business reputation;

• professional qualification;

• experience of managing financial structures;

• financial reliability;

• the transparency of the origin of the funds;

• the presence of sanctions, judicial disputes and regulatory breaches.

The check extends to the shareholders, directors, controllers and persons who actually influence the management of the bank.

The Client Base

When obtaining a Restricted Class B banking licence in the Cayman Islands, the list of clients is one of the central elements of the application. Usually it is permitted to have up to 20 clients. In the business plan, the following are indicated:

• the categories of clients;

• the names of the persons or organisations;

• the nature of the relations;

• the anticipated operations;

• the sources of funds;

• the geography of the activity.

A separate undertaking confirms that the structure will not receive or attract funds from persons absent from the agreed list. If, after arranging a restricted banking licence in the Cayman Islands, the need arises to expand the client base, the changes usually require agreement with CIMA.

The Supervision of the Parent Regulator

If the applicant is connected with a foreign bank, CIMA may request confirmation from the supervisory authority of the country of origin. When arranging a restricted licence for banking activity in the Cayman Islands, the following may be required:

• confirmation of consolidated supervision of the banking group;

• confirmation of a proper regulatory status;

• information about the financial position of the group;

• information about the licences in force.

CIMA assesses with particular attention structures with several jurisdictions and a complex system of ownership.

The Head Office

The head office is a place of conducting activity with personnel, premises, books and internal records in a volume that CIMA considers sufficient for obtaining a category B restricted banking licence in the Cayman Islands. If the structure is not a branch or a subsidiary organisation of a foreign licensed bank, the regulator separately assesses:

• the presence of employees;

• the organisation of internal management;

• the storage of documentation;

• the operational processes;

• the level of administrative presence in the Cayman Islands.

How to Obtain a Restricted Banking Licence in the Cayman Islands: the Algorithm of Actions

The obtaining of a Restricted Class B licence in the Cayman Islands passes through several consecutive stages:

Conclusion

The arrangement of a restricted banking licence in the Cayman Islands is convenient for groups that need a licensed instrument under specific clients, connected companies or family capital. Our team helps to build the procedure in accordance with the requirements of the regulator. The specialists will determine the suitable structure, prepare the business plan, collect the documents on the owners and the management, agree the client list and provide support in the interaction with CIMA up to the decision on the licence.