Dominica has officially closed its offshore corporations’ sector. All corporations must shut down and no new corporations will be allowed to incorporate. As of June 28, 2021, Dominica eliminated offshore corporations and International Business Companies (IBCs).
The specifics of the closure of offshore companies in Dominica are as follows. For the official order, see the Financial Services Unit website.
No new offshore companies will be incorporated in Dominica as of January 1, 2024.
After January 1, 2024, individuals should cease conducting business with any international business company incorporated in Dominica. This is because the company will cease to exist as of that date and as you’ll have no more limited liability or protection from the corporation.
This announcement has gone out to all the international and local banks. Thus, many are in the process of closing the accounts of these structures.
The closure of Dominica’s offshore corporations’ sector has been coming for some time now. Once the country bowed to the demands of OECD and eliminated the privacy component of their offshore structures some six years ago, sales have been down. Why incorporate in Dominica if it offers no privacy? Why choose this country over the competition unless it offers some benefit?
All things being equal, most will incorporate in a country with a better reputation, such as BVI. There is no need to incorporate in a country that is on the grey or black lists unless it provides added privacy.
The second attack on Dominica’s offshore corporate industry came from the IMF and World Bank. The island of Dominica receives significant assistance from these groups, and, when they “suggested” that Dominica should close its IBC unit, the government took notice. Clearly, the amount of free money was greater than the fees and taxes generated by the offshore sector.
The third and final attack on Dominica’s offshore corporation industry was by the United States. Banks in Dominica transact through US banks who act as their correspondent partners. Without these correspondents, the banks in Dominica can’t function.
US regulators told the correspondent banks that they need to get more information on the IBCs being used on Dominica. That is, banks in Dominica need much more KYC and AML on IBC clients.
From a practical perspective, this increased due diligence meant that it was no longer efficient for the banks in Dominica to open accounts for IBCs from Dominica. Thus, all these accounts were closed and the IBCs effectively became useless.
I hope you’ve found this post on the loss of Dominica’s offshore company industry to be helpful. For assistance to incorporate an offshore company or trust in a respected jurisdiction, please contact us.
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