Cains’ Banking and Finance team are once again delighted to have served as contributing editors of the Isle of Man chapter within the recently published The Legal 500: Banking & Finance Country Comparative Guide 4th Edition.

Published by Legalese and The Legal 500, the definitive global law guide provides a comprehensive and pragmatic insight into the current issues affecting banking and finance from across a variety of jurisdictions.

Tim Shephard, Stephanie Chew and Kirsten Middleton, joined top ranked lawyers offering analysis on topics such as national authorities, regulation, licenses, organisational requirements, supervision and assets, as well as insight and opinion on the most common laws and regulations that may occur in Isle of Man.

To read the Isle of Man chapter online click here or for a pdf version click download it here.

Below is a short excerpt from the guide.

Isle of Man: Banking and Finance

 

What are the national authorities for banking regulation, supervision and resolution in your jurisdiction?

All banks in the Isle of Man are subject to a licensing and supervision regime administered by the Financial Services Authority (“FSA”). The FSA is an independent statutory body whose functions include, amongst other things, the licensing, supervision and regulation of deposit takers, insurance companies, money transmission services and credit unions.

The Isle of Man Office of Fair Trading (“OFT”) has a role in the registration and regulation of moneylenders.

 

Which type of activities trigger the requirement of a banking licence?

Absent a relevant exemption or exclusion, deposit taking by way of business in or from the Isle of Man is a regulated activity which requires a Class 1 licence. “Deposit taking” means: (i) accepting deposits of money from any persons and where such money is lent to others, or any other activity of the person accepting the deposit is financed out of the capital of or interest received on the deposited monies; or (ii) operating a representative office of a foreign bank.

For completeness, the provision of loans in the Isle of Man may require registration with the OFT unless such activity falls outside the scope of the Money Lenders Act 1991 (such as where lending is by a body corporate (wherever incorporated) to another body corporate (wherever incorporated) or to any other person apart from a sole trader).

 

Does your regulatory regime know different licenses for different banking services?

There are three sub-categories under a Class 1 licence:

  • Class 1(1) retail/non-restricted deposit taking business;
  • Class 1(2) restricted deposit taking business (under which banks may not accept deposits from retail customers and such deposits are not covered by the DCS (see response to question 23 below);
  • Class 1(3) representative office of a foreign bank (under which representative offices may only undertake marketing and business development activities; the foreign bank must not undertake any transactions in or from the Isle of Man).

Additional classes of licence apply to other regulated activities such as investment business and money transmission services (including the issuance of electronic money).

Click here to view the complete The Legal 500: Banking & Finance Country Comparative Guide 4th Edition.

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