Obtain a Full Banking Licence in the Cayman Islands: Class A Banking License

Obtaining a full banking licence in the Cayman Islands is advantageous for those who intend to organise a financial business within the jurisdiction and on the international market. Such a regime is suitable for working with corporate clients, investment structures and wealthy private individuals.  The Class A Banking License makes it possible to accept deposits, open accounts, carry out settlement operations, issue loans and provide other banking services without restrictions.

A full banking licence in the Cayman Islands is arranged by the Monetary Authority (CIMA). The regulator assesses the origin of the capital, the business reputation of the owners, the experience of the management, the system of internal control, the mechanisms of countering money laundering, the technical infrastructure and the readiness of the organisation for constant supervision.

Obtaining a Full Banking Licence in the Cayman Islands: What a Class A Banking License Is

The Class A Banking License is a permit for conducting a banking business in the territory of the islands and beyond their limits. The arrangement in the Cayman Islands of a full financial-services licence allows a full-fledged connection with the local market in the absence of special restrictions on the part of CIMA. The law classes among banking activity the acceptance and storage of monetary funds on current, deposit, savings and similar accounts with an obligation of return at the disposal of the client, as well as the placement of such funds through lending or other financial operations.

Whom the Arrangement of a Full Banking Licence of the Cayman Islands Is Suitable For

The most understandable model for the regulator is the creation of a subsidiary institution by a large financial group already under the consolidated control of a foreign supervisory authority. In this case, CIMA analyses the quality of the foreign regulation, the interaction between the authorities and the correspondence to the Basel principles of banking supervision.

Within the framework of arranging a category A banking licence in the Cayman Islands, the following are also checked:

• the structure of the group;

• the financial statements;

• the business reputation of the controlling persons;

• the history of the work of the parent institution;

• the presence of breaches or sanctions.

A class A banking licence in the Cayman Islands may also be obtained by a branch of a foreign financial and credit organisation. In this case, the documents of the head organisation are of particular significance. The regulator requests confirmation that the home supervisory authority is aware of the creation of a division on the islands and does not object to its activity.

For obtaining a full banking licence in the Cayman Islands, the following are usually prepared:

• the audited statements of the group;

• information about the capital adequacy;

• the corporate structure;

• data about the management;

• a letter of support on the part of the head office.

The creation of an independent financial institution with the goal of arranging a category A banking permit in the Cayman Islands requires significantly more complex preparation. The applicant needs to prove the ability of the organisation to function as a full-fledged financial institution with its own management system, internal audit, IT infrastructure, staff composition and risk control mechanisms.

The Requirements for Obtaining a Class A Banking License in the Cayman Islands

The minimum fully paid-up capital for arranging a category A banking licence in the Cayman Islands constitutes no less than 400,000 KYD (480,000 USD). With a large client base, an international structure of operations or a heightened level of risk, CIMA is entitled to require a higher volume of own funds. For a banking organisation registered in the Cayman Islands, a minimum capital adequacy ratio applies at the level of no lower than 10% of the assets recalculated by the level of risk, if a different indicator is not established by the regulator.

Within the framework of arranging a full banking licence in the Cayman Islands, CIMA applies a check of the business reputation, competence and financial stability of the persons who control and manage the financial institution. The origin of the funds, the presence of judicial disputes, regulatory sanctions and the corporate history of the participants in the project are analysed. In the composition of the management, a minimum of two active directors is required. At least one of them must possess experience of working in the banking sector and knowledge in the area of managing a financial organisation.

An organisation that plans to obtain a full banking licence in the Cayman Islands cannot exist exclusively in the form of a registered address. CIMA requires a real presence in the territory of the islands. The institution is obliged to have an approved place of conducting activity, which is used as the main office of the bank.

For arranging a Cayman category A financial-services permit, a local agent is required:

• two private individuals who are residents;

• or a legal entity registered on the islands and approved by the regulator.

The Bank's Business Plan: What the Regulator Must See

The business plan is one of the central documents when arranging a full banking licence in the Cayman Islands. CIMA assesses the ability of the future institution to safely and stably conduct financial activity.

The Business Model

It is necessary to disclose in detail the list of services that the bank will provide. Usually the following are described:

• current accounts;

• deposit products;

• settlement servicing;

• lending;

• operations for the management of liquidity and currency positions;

• private banking servicing;

• intra-group operations.

Clients and Geography

The regulator analyses:

• the category of clients;

• the jurisdictions of activity;

• the level of risk;

• the origin of the funds;

• potential sanctions restrictions.

Financial Forecasts

For arranging a full banking licence in the Cayman Islands, it is necessary to show:

• the starting volume of assets;

• the anticipated liabilities;

• the structure of income;

• the expenses;

• the calculation of liquidity;

• the forecast for the first 2 years of activity.

The Operational Infrastructure

When arranging a Cayman category A permit for banking services, CIMA expects to see a description of:

• the IT platforms;

• the security systems;

• the storage of information;

• the internal audit;

• the accounting;

• the contracts with contractors;

• the cyber defence;

• the staff structure.

Risk Management

In order to obtain a full banking licence in the Cayman Islands, it is necessary to show the ability to control:

• credit risk;

• market fluctuations;

• operational failures;

• liquidity;

• AML risk;

• internal breaches.

A full-fledged risk management system is required of the applicant — with internal procedures, manuals and control mechanisms corresponding to the scale of the future activity.

How to Obtain a Full Banking Licence in the Cayman Islands

The obtaining of a full banking licence in the Cayman Islands requires the passing of the following stages:

Conclusion

Our company supports the obtaining of a full banking licence in the Cayman Islands — from the assessment of the model of the financial institution to the interaction with CIMA. The specialists analyse the ownership structure, prepare the documents, the business plan, the AML/KYC policies, the financial forecasts and help to build up the local presence.