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Starting Your Own Offshore Financial Company

If you are doing business offshore you will typically bank offshore in a convenient, tax advantaged location. However, you will still pay fees for financial transactions and the bank will still earn more on your deposits and from services than you do in interest. There is a way to make your banking needs, and those of others doing business offshore, work for you. You can start your own bank or offshore financial company (OFC).

Your immediate response may be that banks or offshore financial companies take a lot of capital and are subject to a lot of regulation which makes running a bank expensive. In this case we are talking about how to offer offshore banking services, such as a New Zealand Offshore Financial Company (NZOFC), which can be a different matter entirely.

What is Possible in Setting up an OFC

It is entirely possible to set up offshore banking in jurisdictions where the capital reserves requirements are definitely not those of a traditional bank in the same nation.

It is possible to set up a tax advantaged banking solution and to be able to offer traditional banking services including checking and savings accounts, credit and debit card services, trust account services, certificates of deposit, wire transfer services, and trust account services. The offshore financial company offers these services to both private and corporate clients.

Who Sets Up an Offshore Financial Company?

Banks set up OFC’s. So do multination corporations and offshore corporations. Groups of companies do this to reduce their banking expenses and gain profits and investor groups do the same. The formation of an offshore financial company can result in substantial tax advantages for the investment, corporate, or banking group which is typically why they do so. It is possible to set up an offshore financial institution so that the cost of doing business is much less than in the countries where the institution’s shareholders come from.

Setting up a bank or an offshore financial company allows the entities mentioned above to profit from their own banking needs and profit from selling banking services to others. The tax advantages of offshore locations as well as well packaged services such as trust accounts, international credit and debit cards, savings and checking accounts, loan services if well merchandized, can attract business and provide a profit over and above the savings that the offshore bank will provide its shareholders.

Where Do the Laws Allow an Offshore Financial Company?

An excellent example of an offshore banking solution is a New Zealand Offshore Financial Company. New Zealand law allows one to set up a credit union, building society, or finance company as well as a registered bank in its jurisdiction. Any of these NZOFC’s can be set up by an offshore entity such as an offshore corporation. Customers are other private individuals or corporate entities.

A New Zealand Offshore Finance Company does not require the substantial reserves required of a standard bank in New Zealand or elsewhere. Such an institution can be set up in such a way that reports to the New Zealand Federal Reserve Bank are not required. This can substantially reduce the work required and the cost of operation.

Despite the ease of operation of this opportunity and potential for a low cost of entry a New Zealand Financial Company can offer a full range of banking services to customers, including checking and savings accounts, credit card services, and investment marketing.

The ease of operation and freedom from red tape in running a NZOFC basically comes from offering services only to clients offshore from New Zealand.