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SDR FULL INTERNATIONAL BANKING LICENSE HOLDERS: |
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Functioning of all financial institutions in or from the Somalia Democratic Republic falls under the International Bank Act 2003 which specifies the regulations of obtaining licenses to conduct financial activity in or from SDR. According to the International Bank Act 2003 such licenses are granted, refused or revoked by the Somalia International Financial Centre after an application was made by a person or body of persons wishing to run any financial institution in or from SDR.
Licensed financial institutions in Somalia Democratic Republic include: banks, offshore finance companies (OFC), insurance companies and remittance companies.
Banks. OFC. Because of the difficult political situation in SDR the Central Bank of Somalia cannot function properly. That's why there is plenty of opportunities for those who wish to buy or create a bank of their own. In order to gain a banking license in SDR one should meet the following requirements:
- clean certificate of no criminal record issued by your local police;
- notarized ID or passport copy certified with apostil;
- a letter of reference from a reputable international bank, accounting or law firm;
- 100,000 USD in a form of either a cash deposit or guarantee from a foreign financial institution.
In case an applicant meets the abovementioned requirements successfully he or she may apply to the SIFC for a banking license. The documents needed include:
- application form(s);
- notarized copy of Memorandum and Articles of Association of a corporate body seeking the license;
- copies of latest accounts of the corporate body;
- financial guarantee from a reputable international institution of at least 1mln. USD (or a security deposit left with the SIFC)
- business plan and cash flow forecast.
The registration fee for a banking license is stated by the SIFC and is approximately 25,000 USD.
Insurance companies. The International Bank Act 2003 offers an alternative to banking business in Somalia aˆ“ an insurance company. There are two types of insurance companies in SDR: captive insurance companies which are used for intra-group transactions for tax mitigation or for wholesale offshore reinsurance and general insurance companies which are authorized to carry most forms of investment business.
The requirements for a person wishing to run an insurance company are the same as for those who apply for a banking license, apart from financial guaranty which is not needed in this case. The same refers to the documents necessary to apply for a license. But the registration fee is lower aˆ“ about 15,000 USD aˆ“ which makes insurance business even more preferable than banking.
Gaming. Besides the above-mentioned types of licenses the SIFC also issues gaming licenses which allow its holder to operate a casino and other game of chance anywhere outside the territory of SDR. Such licenses are usually used by Internet-based gaming operations.
Remittance companies. Remittance cervices have become a large industry in Somalia. Successful people abroad contribute to the economy of the country about 2 billion USD annually. There are three main reasons why they do it:
- to support family in Somalia;
- to fund an investment (e. g. business or property development);
- to finance trade.
But the situation with Somalia remittance business is unique, because the unstable political situation, absence of a regular banking system means that the international money remittance companies (such as Western Union) do not operate in Somalia. The Somalia remittance system works as follows:
Each remittance company has agents in various countries throughout the world.
The process of remitting funds is simple. An individual contacts an agent of the remittance company in the country where they reside, presents the cash they want to remit, pays the fees, and supplies information of the recipient. The agent deposits the cash in a local bank account to be transferred to the company bank account either in Djibouti or Dubai. At the same time the agent faxes or e-mails information, including the amount, the sender, the recipient and instructions as to where to deliver, to a clearinghouse. The clearinghouse contacts the agent closest to where the recipient lives and delivers the cash in U.S. dollars and the transaction is completed.
Licensing Procedure
Investment Business License Application
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