Bank account recovery

Non-resident professionals can incorporate offshore companies and International Business Corporations in Anguilla. Following the approach to seek the best solution per business segment, banking relationships are often established in another jurisdiction. The Caribbean has always been at the forefront of corporate globalization and therewith makes way for several offshore financial centers. These jurisdictions are familiar with the working of the structure of the International Business Corporation and therefore understand their mechanics often better than other jurisdictions.

Beneficiaries of offshore companies and International Business Corporations often reside in countries distinct from the company and its financial matters. As such, banking relationships are often arranged in countries like the Bahamas, Cyprus, Malta, Latvia, and many others. The local infrastructure in these international financial centers is tailored towards non-resident activities and global corporations. Bank account opening in these jurisdictions therefore remains straightforward and relative easy to maintain for those who comply with the rules in the home and host states. Lack of compliance recently led to bank failures and bothersome, lengthy legal procedures to close the bank and return creditors’ money. The issue of compliance and customer due diligence became paramount during recent years.

The Pitfalls of Offshore Financial Centers

Global finance is complex, yet necessary to fulfil the current needs of society. Global value and supply chains often utilize several independent countries to complete an end-product. As such, local companies and banking facilities must consider international standards to stay relevant and be able to operate in a global setting. False assumptions and misunderstandings originate from the point of view that the local habits in the country of residence of the entrepreneur are identical in other countries. This is even furthered by fundamental differences between civil law and common law legal systems.

Most offshore financial centers are part of the Commonwealth of Nations where the common law system prevails. As such, the flexibility of interpretation and motivation leads to sophisticated case law and jurisprudence applicable in all common law nations. Since many beneficiaries of offshore incorporated International Business Companies reside in countries with a civil law system, conflict of laws is inevitable.

Bank Failure and Offshore Companies

The capital position of financial institutions is critical for maintaining its business model. Banks may act as retail or commercial banks with deposit taking and lending as main activities, or as an advisory business in the form of investment banking. The core activities follow the decision on the licensing and regulatory capital requirements. As a consequence, financial institutions may choose a profile they see best fit for their purpose.

From a regulatory perspective, the financial system must be protected against default and consequential disruption of public confidence. Safeguards are established by capital adequacy and the implementation of a set of global rules and codes of conduct. One of the core pillars of the regulatory framework contains best practices for anti-money laundering and counter terrorism financing standards. Based on the above, financial institutions can fail because of financial and liquidity shortages, or when they forget to obey to mandatory international standards. An example of the first type of failure is the recent administration of Lucayas Bank in the Bahamas where intangible assets were impermissibly brought in to cover the core capital of the bank. Bank failure by alleged violations of international standards and the withdrawal of the banking license recently happened in for example countries as Cyprus, Latvia and Malta.

Asset and Fund Recovery

Anguilla IBC and offshore companies often hold assets in different jurisdictions. Recovering these when one part of the international value chain fails is not always easy. Where the failure is systemic, regulators may intervene by following a pre-defined framework of resolution. Creditors whose bank accounts are blocked or frozen often need reliable strategies and proven tactics to recover their assets. When the bank itself fails or is likely to fail, different tactics are needed to secure the account balance. A crucial determinant is that in matters of bank failure and corporate liquidation, there are no second chances. Creditors cannot just wait and see for things to return back to how things were before. Even though it feels wrong, creditors must act with diligence and care to comply with the requests of statutory administrators or liquidators. To make matters even more stressful, there are timeframes and limitations to claim filing.