1. There are more than 30 registered Banks in Cyprus from different countries: Belgium, Bulgaria, France, Greece, Russia, Sweden, England, USA and etc.
An offshore Bank can be registered as a new-founded Bank as well as a branch of a foreign Bank. The Central Bank of Cyprus prefers to get and confirm applications on registration of branches of already existing banks (from 36 registered Banks only 3 were newly founded Banks).
2. According to the Law about Bank activities, Chapter 124, a Bank intending to register an offshore branch in Cyprus must send an application and some necessary documents to the Manager of the Central Bank of Cyprus, who regulates the granting of Banking licenses. After having made an application (if the answer is affirmative), the Bank must open an acting office in Cyprus and realize there proper activities allowed by the Law and Banking license. Bank must have highly qualified and experienced staff and perform all banking operations allowed by the Law. It mustn't be only a banking ''legal address''.
The Bank branch performs its activity as an offshore organization, in particular it makes bargains with foreigners and operates with different currencies. The Bank doesn't have to follow the rules included in the law of the Central Bank of Cyprus about the minimal reserve fund, the amount of maximal percentage rate, dealing with the foreign assets and regulation of foreign currency operations, investments in shares and other immovable property. But the Bank branch must present the Central Bank of Cyprus with information about its activity and its ability to perform its duties and fulfill its debt obligations, as usually is done by the banking practice - of every other ordinary Bank.
Banking branch pays an annual fixed rate -15,000 US Dollars to the Central Bank of Cyprus to compensate the expenses for inspection of its activity. The branch has to prepare an annual account and present it to the Central Bank of Cyprus for inspection. The account must be prepared by independent auditors invited by the branch and approved by the Central Bank of Cyprus. The branch must help the independent auditors in every way possible while performing their duties prescribed by the Central Bank of Cyprus. In the annual financial account the independent auditors must inform the Central Bank of Cyprus that:
Documents necessary for Bank-branch registration
1. Application to the Central Bank of Cyprus.
2. Letter of Comfort, made by the Head-Office of the Bank and signed by the main share-holders or individuals owning the controlling block of shares (Addition 1).
3. An extract from the report of Directors Council meeting, which has decided to found an offshore Bank Unit and to present Letters of Comfort to the Central Bank of Cyprus (Addition 2).
4. Letter of Authorization of the Central Bank of Cyprus allowing the last and its employees to get and to give information to the authorities inspecting the activity of the Head Office (Addition 3).
5. Information about the Bank and its activity:
a) A short history of the Bank's functioning. It should mention the attaining in services development, getting in new spheres of banking activities, financial abilities.
b) Confirmed account of last 3 years in banking activity.
c) Bank's experience, if there's such, in offshore business and/or supposed offshore banking activity, which is intended by bank.
d) Existence of other branches of Applicant-Bank and of other companies founded by this Bank. The list of allowed kinds of banking activity or special permissions granted by their Bank in other countries.
e) The list of the Bank's correspondance accounts in any country including address, telex and fax numbers of these Banks.
f) The Copy of Memorandum and establishment agreement. There must be a true translation of these documents in English if necessary.
g) The Bank regulatory system in the Head Office of functions and duties of the executing directors and the managers of the Bank.
h) The list of main shareholders and owners of controlling block of shares with their share percentage and short description of their financial state.
6. Information about the supposed offshore operations in Cyprus.
a) The reason of making the application.
b) The type of offshore banking operations for which the application is made.
c) Difference in aims and mentioning of short, middle and long-lasting plans in the Bank's activity in Cyprus.
d) In what way the Bank-applicant is going to realize its activity for improvement, varying and development of already existing offshore banking and financial activity in Cyprus creating for Cyprus a reputation as an offshore banking and financial center.
e) Experience, qualification, reputation, nationality and address of
individuals who will regulate and direct the branch of the Bank.
f) The name, address and professional qualification of independent
auditors, who will audit the branch.
g) Feasibility study of supposed offshore bank operations, the supposed
correlation of income and expenses, approximate balance sheet with
sources and quantity of capitals for the first 5 years of banking
operations.