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Nauru offers the possibility of setting up a bank with no requirement for local directors or any local presence apart from a registered office and company secretary in Nauru. These services would normally be provided by a management organization.
Nauru will accept applications for unrestricted licenses or for in-house type banks but in practice the authorities are unwilling to grant unrestricted licenses to anybody other than an existing bank and would also impose a requirement that the applicant set up an office and associated infrastructure in Nauru. The capital requirements for an in-house bank are as low as - USD 100,000 - and the time scale is in the order of one to three months.
Conditions
The detailed conditions on which Government normally issues banking licenses are set out in the Principal Conditions of a Banking License. The low capitalization, non-interference in operations, minimum administrative expenses and simplicity of the banking laws, rules and regulations provide enough incentives to genuine entrepreneurs to seek banking licenses under the laws of Nauru. Nauru is absolutely the easiest jurisdiction in the world to get a banking license.
Only restricted ("non-resident") offshore banking licenses are issued in Nauru. This means that all the operations of the bank should be "in house" and should not raise deposits from the public in or outside Nauru. Nauru banks can not advertise themselves in public.
This can be circumvented by setting up and using a subsidiary (to the bank) finance company which may conduct a broader range of activities. For example, the finance company could take deposits from third parties and would then deposit the money with the bank. Any literature which was drafted could make clear reference to the fact that the finance company is a wholly-owned subsidiary of XYZ Bank Ltd. and contain further details about the bank. Practice has, however, shown that the Nauru restricted banking licenses meet the requirements of most clients.
Capitalization Requirements
A Nauru offshore bank should raise a minimum paid-up capital of US$100,000 within a period of two years from the date of issue of the license. This means that the bank can be registered without any paid-up capital. There is 24 months time to comply with that requirement. Auditor's proof is required that the capital has indeed been paid up. The capital does not have to be deposited with the Bank of Nauru. It can be maintained outside the jurisdiction.
Directors
Banking licenses are granted only to persons who have a sound financial standing, are well reputed in commercial and financial circles and have acquired sufficient expertise in banking, trade and industry. No local directors are required. Management of a Nauru offshore bank may be entirely located outside of the country.
Business Plan
There is no detailed business plan required. Only a brief description of intended activities is needed.
Annual Reporting Requirements
A Nauru offshore bank should furnish to the Registrar audited balance sheets and profit and loss accounts of each year within six months from the date of closing of annual accounts. Auditor(s) may be from outside of Nauru. Internationally recognized auditing companies are accepted as well as smaller local agencies.
Registration Time
Incorporation of a Nauru trading company, which is essential for obtaining a banking license, takes a week. A banking license is issued in 1 or 2 months. Legalizing of corporate documents, which is necessary for opening of correspondent accounts, may take another 1 or 2 months.
Correspondent Account Availability
Correspondent account facilities can be set up for Nauru banks without any significant restrictions. Basically, you will have to meet certain requirements to establish correspondent accounts with most banks. The larger and more reputable the bank, the stricter the requirements!
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