About once a month I get an inquiry from some unfortunate soul who bought a bank license from an agent in the African nation of Gambia. The caller has his license in hand and now wants to get a corresponding account and operate as a bank. Yeh, good luck with that… Gambia offshore bank licenses are a scam.
When I Google “Gambia offshore bank license,” I get back hundreds of relevant results. Most on the first two pages of Google are promising to sell me a bank license from Gambia for cheap. They look official, and use all the right terms, but I can tell you that an offshore bank license from Gambia is a scam.
I see statements like, “Buy Your Own Offshore BANK, Only £16,200” and “No Capital Required,” all over the web and I know that many are being taken in by this scam. Owning an offshore bank in 2016 requires a great deal of capital and a quality license is VERY hard to get. The offshore bank license from Gambia is a pipe dream for the following reasons:
These promoters have made backroom deals with government agents in Gambia. They get paid in full when they deliver to you a banking license. And, because they get a cut, the government offices print these license like the US mint prints dollars.
The government knows it can’t give out hundreds of real licenses. So, they have invented the “provisional” license. This doesn’t allow you to conduct any banking business, it just allows you to begin the process of setting up the bank and then apply for a “full”license once you have a correspondent and other necessaries in place.
The promoters and the Central Bank know that no one will be able to get a corresponding account with an offshore license from Gambia, so there is little or no risk the license will ever be activated. And, if someone did manage to get a correspondent, the Central Bank can invent any number of excuses not to give you a full license… at least, not before they get paid again… this time paid big.
But it’s the inability to get a corresponding bank account that makes the Gambia offshore bank license a scam.
In order to begin operating your bank, you must partner with larger banks around the world. For example, if you want to conduct business in US dollars, you need a corresponding partner in the United States.
If you’re a newly minted offshore bank in the Caribbean, and have $5 to $10 million in corporate capital you can deposit with at your corresponding partner to cover risk, then you might get a US bank to agree to take you on. Even with millions in capital and a quality license from Cayman, Dominica or St. Lucia, there are no guarantees, but you have a high probability of success.
With that in mind, and with the knowledge that you can’t operate as a bank without a solid corresponding partner, consider the email exchange I got yesterday that inspired this post. It basically when as follows:
Hey Christian, I just got a bank license from Gambia. Can you help me open a corresponding account? Regards, Bob
Hi Bob, How much capital do you have in the bank? What did you pay for the license? Do you have a business plan and financial projections ready to go? Regards, Christian
Hi Christian, We have no capital invested and don’t have a business plan. I bought the license for $25,000 and now need to get the bank up and running. Help, Bob
Hi Bob, Well, let me know when you have $10 million in corporate capital, a 200 page business plan, and audited financials. Then we can try to make something of the license. Regards, Christian
Christian, If we had $10 million, we would have bought a proper license. We don’t have any cash, but we want to get this bank operating. Bob
Hi Bob, Good luck with that. C
And that’s the crux of the Gambia bank license scam, “If we had $10 million, we would have bought a proper license.” Without the capital, you have no shot at getting a corresponding partner and thus there is nothing you can do with the license.
He now has a provisional bank license he can’t do anything with. He’s out $20,000 and he’s spinning his wheels hoping to make lemonade out of bird crap. In a few months, the government will take back the license for non-performance and the scam is complete.
There is one and only one legitimate international banking license which requires less that $5 million in capital. That is an offshore banking license from the US territory of Puerto Rico.
An offshore license from Puerto Rico can be had with capital of $550,000. You will also be required to open an office in Puerto Rico with at least 4 employees.
An international license from Puerto Rico allows you to engage in all manner of banking business. The only limitation is that you can’t offer services to persons in Puerto Rico… which is the case with all international licenses.
The primary benefit of an offshore bank in Puerto Rico is the relative ease of getting a US correspondent account. If fact, a bank licensed in Puerto Rico could apply directly to the US Federal Reserve for services.
And, to sweeten the pot, Puerto Rico offers a guaranteed tax holiday to offshore banks operating under Act 273. This statute guarantees you a 4% tax rate for 15 years.
So, Puerto Rico gives you the best of both worlds - access to US correspondent services and low tax rates previously only found in traditional offshore jurisdictions.
For more on Puerto Rico’s offshore banking statute, checkout my article Lowest Cost Offshore Bank License is Puerto Rico.
I hope you’ve found this post on Gambia’s offshore bank license scam helpful. Please contact me at firstname.lastname@example.org with any questions on Puerto Rico or to setup a properly funded bank in Dominica, St. Lucia, Cayman, or Panama.