If you’re all geared up towards setting up a bank or any other financial institution with international reach and quite impressive legal virtues, then Puerto Rico could be a nice solution. This US-governed island ensures integration with the American banking system plus generous tax bonuses, in particular, for bankers. This review will uncover how to receive the required permission on this island.
Why Puerto Rico?
For many years, Puerto Rico has been gaining attention as a go-to place for fintech firms, international financial institutions, alongside wealth firms. The answer is rooted in the fact that its legal framework is built around American federal laws, integration with the American banking environment, in particular, with the Act 273, which has to do with the International Financial Entities license.
It gives you an excellent opportunity to establish an offshore-style financial institution serving users outside this area while staying under the American banking framework. Moreover, you benefit from a 4% corporate levy, 0% on distributions, as well as other exemptions, which are quite huge for firms dealing with foreign finance.
How to get a banking license there
Despite the fact that getting a banking license in Puerto is not an easy thing, it’s not something unreal. You just need to follow this algorithm:
- Pick up the appropriate structure: You may choose an IFE license that falls under Act 273. It’s an appropriate solution for firms serving non-Puerto Rico residents or companies.
- Form your local entity: You are expected to register a local entity. As a rule, entrepreneurs choose an LLC or corporation. It’s carried out via the Puerto Rico Department of State.
- Apply for the IFE license: It’s necessary to upload your request to the Office of the Commissioner of Financial Institutions. As for the docs required, they include a business plan plus financial projections, risk policies, not to mention a compliance program. Additionally, relevant banking or finance experience should be at hand.
- Capital criteria: Your starting paid-in capital should amount to $550,000, and out of this sum, about $300,000 needs to be kept as a deposit in a local bank.
- Physical presence: Your bank is expected to be physically based on the island. Furthermore, your financial institution should have at least four employees, depending on services. Some of them may work remotely, but local management is a must-have option.
- Licensing review: Your application will be reviewed within 3–6 months. By the way, the approval time can be reduced. You just require exploring a banking license for sale.
Advantages of getting licensed there
It really makes sense to start a financial business there because here you can count on the following advantages:
- Low tax rates: 4% corporate tax, while on dividends you will pay zero taxes.
- Regulatory advantage: American legal framework without full FDIC regulation.
- Credibility: An IFE license has gained greater trust than regular offshore licenses.
- Global reach: You can work with international customers while retaining your American location.
- Legal protection: You can benefit from American laws, as well as commercial privacy.
Even if registration from scratch is not suitable for you, it makes sense to explore fully operational banks for sale.
Some serious things you should be aware of
Having such a license suggests real commitment. In particular, you can’t do without a compliance system, qualified directors, audits, to say nothing of regular reporting. Nevertheless, with appropriate preparation and a solid vision, you can derive huge benefits from this license.
By the way, with this license, you can’t work as a retail banker for local residents. Perhaps, it’s your goal, but in this case, you should be licensed differently.
How much does it cost to get a business license in Puerto Rico?
A regular license is worth $50-$150. As for a banking one under Act 273, stricter criteria increase the cost as well. So, get ready to shell out nearly $200,000–$300,000.
Can a foreigner open a bank account in Puerto Rico?
Foreigners are allowed to open personal, as well as business accounts, on the condition that they adhere to the bank’s KYC/AML criteria. Fintech startups, as well as foreign firms often rush to this place.
How to get a banking licence?
You require an IFE license and you can apply via the OCIF. Besides this, you should adhere to staffing and also capital criteria. Additionally, you need to submit a full business plan and pass due diligence. You may not keep yourself waiting if you consider a banking licence for sale.
How to open a bank account in PR?
You require submitting your ID and proof of address, in addition to business docs for corporate accounts. Furthermore, banks also need info regarding your activities to stay in line with American law.
