Bank Account Recovery
The Republic of the Seychelles is a large scale international financial center where global entrepreneurs, international professionals, and other non-resident workers can set up an international business corporation (IBC) to trade internationally. The jurisdiction has a strong focus on the acquisition of small and medium sized enterprises, sole traders and consultants. Public companies and multinationals rarely use the jurisdiction as a radar in their corporate structure or to park their holdings. As a result, the Seychelles launched over time several initiatives to attract foreign direct investment in the way of non-resident and administrative business to bring finances to the country whilst maintaining its local infrastructure. Similar to many other international financial centers, the Seychelles is considered an offshore jurisdiction.
To accommodate the needs of its foreign users, and by remaining a competitive international financial player, novel and innovative solutions are presented to a diverse clientele. Some of these services have a short lifespan and are rejected by the international society. An example was the aged and segregated Economic Development Act that allowed citizenship and immunity from prosecution for financial crimes from the past. In a more current environment, IBC incorporation provides non-residents with administrative and fiscal advantages, and trading platforms and FinTech firms are able to obtain a license to operate.
Beneficiaries of Seychelles IBC’s enter into several agreements with professional parties. The core of their needs is mostly in finance. Without a proper banking relationship, commercial transactions cannot be executed. In line with the choice of foreign company establishment, offshore companies and their beneficiaries may choose the most appropriate location for their banking needs. This is often outside their place of personal residence and corporate establishment. When activities go well and the bank remains operational, beneficiaries don’t even consider the impact of a bank failure or unintended closure. But when things go wrong, an avalanche of difficult to unravel codes, rules, regulation, and other laws is thrown over the banks creditors.
Creditors of (offshore) bank failure become victims when their unsecured account balance is drastically written down. This often applies to offshore companies and includes several IBC’s that were incorporated in the Seychelles. Local regulators and central banks therefore try to avoid that resolution leads to liquidation and dissolution of the bank holding company and its subsidiaries. This does not always go well as offshore companies experienced in several European bank failures. Sometimes though, the procedures start from a very promising point. The matter of Lucayas Bank in the Bahamas that was placed under statutory administration in October 2021 is such an example. Although no predictions can be made on the future prospects of the bank, the local Bahamian Bank and Trust Companies Bill of 2020 defines the statutory framework of financial institutions in distress. The Bill allows for a fair and equal treatment of creditors. This, however, does not mean that creditors see all their moneys returned. It just means in a very straightforward way that bank liquidation in the Bahamas allow for equitable distribution of assets to creditors where losses are equally shared by these very creditors.