The banking system in Barbados has a long tradition of stability. The system is well established with a number of local and international banks, modern banking facilities and progressive laws relating to money laundering and exchange control.
The financial institutions in Barbados fall into three main categories:
- Commercial Banks
- Trust Companies, Finance and Merchant Banks licensed to operate in Barbados
- Banks licensed in Barbados to provide international financial services
Additionally, financial services are offered by Mortgage and Insurance Companies, Credit Unions, Co-operatives, Finance Houses and the Barbados Stock Exchange.
It is the role of the Central Bank of Barbados to monitor, regulate, licence and inspect the activities of all commercial banks and financial institutions in Barbados.
Bank Accounts and Loans
It is advisable for an investor to maintain a bank account in Barbados to facilitate the smooth completion of transactions.
Under specific pieces of legislation, e.g. the International Financial Services Act and the Financial Institutions Act there are capital and deposit requirements that must be maintained by entities licensed under those Acts.
A non-national individual may open a bank account by presenting two forms of Identification and by depositing the minimum amount required for deposit with the particular bank. Due to the enactment of the Money Laundering and Finance of Terrorism (Prevention and Control) Act, Chapter 129, investors are required to provide bank and professional references and evidence of the source of funds to be deposited. In October 2013, the Central Bank of Barbados issued an Anti-Money Laundering Terrorist Financial Guideline pursuant to the Money Laundering and Financing of Terrorism (Prevention & Control), which has replaced its Know Your Customer (KYC) Guideline.
An external company, i.e. a company incorporated in a jurisdiction other than Barbados, must first be registered under the Companies Act, Cap.308 as an external company, in order to open a bank account with a commercial bank in Barbados.
Although local commercial banks offer unlimited foreign currency accounts to qualifying non-resident investors, all foreign currencies being deposited into a bank account must be declared to the Exchange Control Authority of the Central Bank of Barbados. If such a declaration is not made at the time the investment is made, restrictions may be imposed by the Exchange Control Authority on the amount of profits and capital the investor can repatriate off the account.
Financing through a local commercial bank using domestically generated funds is generally available only to Barbadians or permanent residents of Barbados. Additionally, under the International Financial Services Act, restrictions are placed on the amount that a bank licensed under that Act can lend without security to related parties.
Loans: Nationals, Residents or Non-Residents
Local commercial banks and residents may not make loans to a non-resident without the permission of the Exchange Control Authority, and may not lend foreign currency to residents without permission.
In addition, a loan from a non-resident cannot be secured by a mortgage of real estate in Barbados without the permission of the Exchange Control Authority, nor can a loan to a non-resident be secured by a mortgage of real estate in Barbados without a similar permission.