Offshore Banking without a Bank: an NZOFC

Sept. 14, 2010 - PRLog -- For those interested in banking offshore or in opening a bank offshore there is a unique solution in the country of New Zealand. It is a New Zealand Offshore Financial Company or NZOFC. Although an NZOFC offers the whole range of services that a bank does it is not a bank. In fact, an NZOFC is strictly prohibited by New Zealand law from calling itself a bank or implying that it is a bank. So, how do you do banking without being a bank?

A little background is in order here. An NZOFC is an offshore entity. It can accept deposits from anywhere in the world but not from anyone in New Zealand. Likewise, an NZOFC can provide loans, debit and credit card services, and more as a bank would to customers across the globe. It just can’t provide these services to New Zealand residents. This is, by the way, a common situation with offshore banks, trust services, international business corporations, and the like. They are typically licensed in a given country but cannot do business there.

An attractive aspect of a New Zealand Offshore Financial Company for the investor is that because an NZOFC does not operate under New Zealand banking law it is not subject to any capital requirements and is not under New Zealand Central Bank jurisdiction. There are laws governing the operation of an NZOFC but they are not “banking” laws. Setting up an NZOFC is not especially time consuming and with the proper agent it can be integrated into an overall offshore asset protection solution.

For those interested in banking offshore or setting up a New Zealand Offshore Financial Company a number of things are of interest. An NZOFC does not have any limit on the number of depositors or size of deposits. An NZOFC does not limit who can deposit or who can set up such a company. Although anyone in the world can apply for licensure it is a matter of practicality that such companies typically have at least one New Zealander as a director, shareholder, or officer with the right to do business for the company. This is simply because of the fact that New Zealand is a long ways away from Europe or North America, for example. A positive aspect of an NZOFC for the investor is the ease with which it can be integrated into a set of asset protection solutions available in any of several offshore jurisdictions. It is not uncommon, for example, to set up an NZOFC as an asset of a trust or foundation providing a welcome layer of asset protection for the investor.

For the depositor the distance is not a great issue. A larger issue for depositors is the ability to integrate banking with an NZOFC with other offshore asset protection vehicles such as a New Zealand trust, Panama Private Interest Foundation, or an international business corporation from any of several offshore jurisdictions. The fact that an NZOFC cannot call itself a bank does not negate the fact that such an institution can provide banking services to clients worldwide.

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