If you’re in the market for a Cook Islands bank account, or you just want to know what options you have for banks in Rarotonga, you’re in the right place.
But before diving into the account opening particulars, let’s pull back the curtain on this tiny South Pacific nation so you can make an informed decision.
Chances are, you already know the Cook Islands are renowned for asset protection and international trusts. And if you know anything about internationalization, you know the Cooks have some of the strongest trust laws in the world.
So it’s no surprise that international media outlets have aimed to cast a sinister shadow over the islands…
But mainstream media aren’t the only ones shining a spotlight…
The internet abounds with references to the Cook Islands being an “international financial center” or an “international banking hub.”
But, the Cook Islands aren’t really a financial center at all.
Instead, this country is a hub for asset protection.
In fact, while this article is about banking, it’s worth mentioning that the Cook Islands offer solid international asset protection for many people…
According to the Ministry of Finance in the Cook Islands, the country’s banking sector has just over US $300 million in assets.
Compare that to Andorra (~$16 billion), Bermuda (~$21 billion), Cyprus (~$68 billion), or Jersey (~$180 billion), and you start to wonder who is actually banking in the Cook Islands?
You see, no matter how great a country’s asset protection laws are, it can still have an unattractive banking sector.
And, with all the de-risking that’s been taking place in recent years, small island nations are particularly vulnerable.
And that’s exactly what many people discover when they open accounts with banks in Rarotonga and start banking in the Cook Islands…
Opening a Cook Islands bank account is something that many people consider. However, those people are usually tied to the Cooks in one way or another. Let’s take a look…
If you’ve set up a Cook Islands trust, you might be realizing that opening an international bank account isn’t going to be as easy as your lawyer promised.
But, you already paid for a trust, set up some LLCs or IBCs to hold assets, and now you’re wondering how do you open a bank account?
In most cases, after tapping out all other options, people start to look at options in the Cook Islands. After all, banks in the Cooks are familiar with Cook Island trusts, so it should be possible.
On the other hand, the Cook Islands also play host to around 170,000 visitors each year. With direct flights to Rarotonga taking only 4.5 hours from Auckland or 7.5 hours from Sydney.
So maybe (if you’re a frequent visitor), you might decide that it would be good to have a Cook Islands bank account to support your tourism activities.
For everyone else, you’re probably not going to find many reasons to open a Cook Islands bank account. And, speaking from experience, there are plenty of other banking options you should be considering instead.
But, if you’re struggling to open accounts and think the Cook Islands might be the only destination that’ll work for you, keep reading…
We’re going to dig into banking in the Cook Islands, the banks in Rarotonga, and some of the reasons why you should (and shouldn’t) open bank accounts here.
Now, let’s look at some of the reasons that people might choose to bank here.
As we’ve already pointed out, the robust asset protection laws offered by the Cook Islands have long made the country popular among high-net-worth individuals looking for international trusts.
In many cases, these settlors (people who set up a trust) look at the most obvious place to open bank accounts for their new asset protection vehicles, the Cook Islands.
But there are a few other reasons why people and companies are attracted to the Cook Islands, especially when compared to other offshore banking jurisdictions.
Below, are a few reasons why someone might opt to open offshore accounts with banks in Rarotonga:
Today, there are a handful of banks operating in the Cook Islands, including ANZ Banking Group (ANZ), Bank of South Pacific (BSP), Bank of the Cook Islands (BCI), and Capital Security Bank (CSB).
But, if you’re like most people looking to bank in Rarotonga, chances are you want an international (or offshore) bank account…
In that case, your options are limited.
While ANZ, BSP, and CSB all have international banking licenses, only one of them actually offers banking services to international clients, and that’s CSB.
In fact, since 2014, CSB has been the only bank in the Cook Islands to actually use it’s international banking license to offer asset management and custodian services to international clients.
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Some of the requirements for opening a bank account as a foreigner include a certified copy of the account holder’s passport, proof of address, and a detailed curriculum vitae, etc.
In other words, to open an account here, you’ll need to be ready to jump through the normal account opening processes that you will face in any other country.
Additionally, there are some challenges that you should be aware of…
Banks in Rarotonga are still relatively unknown outside of the offshore industry and international trust experts. So, transferring money in and out of the country could raise a few eyebrows with your foreign bank.
And while the Cook Islands are on the OECD white-list right now, the country has been on black lists and grey lists in the past. Depending on how things go in the future, there’s a risk that such appearances could be repeated.
There’s also a severe shortage of professional talent in the Cook Islands. And, the talent pool shrinks every year. With New Zealand passports, many qualified locals find more opportunities abroad than in the middle of the South Pacific.
This mass exodus of local professionals is expected to get worse in the future and strain both the private and public sectors. So, when it comes to banking, you might find customer service lacking compared to what you’ll find elsewhere.
But more than anything, the biggest challenge facing Cook Islands bank accounts and banks in Rarotonga has nothing to do with the islands at all…
There have been instances within the last few years where Cook Islands banks have actually lost their ability to send and receive certain currencies, including US dollars.
This happens when their correspondent banking relationships (CBRs) are terminated, either for breaching the rules of that relationship or (more often than not) due to de-risking pressure from foreign governments (e.g., the US or EU).
When CBRs are terminated, banks can no longer send international transfers. You can’t access your money, and your cash is effectively frozen.
Basically, if you have any assets tied up in a Cook Islands bank that loses their correspondent relationship, you’ll have to wait until they find another correspondent bank to access your cash… and that can take months.
This is an increasingly important consideration for people opening international accounts in small banking jurisdictions.
Global regulatory bodies (e.g., FATF, OECD, EU) are all stepping up pressure on foreign jurisdictions known for asset protection and low (or no) tax… and their weapons of choice are adding countries to blacklists followed by cutting correspondent bank access.
As always, when opening bank accounts abroad, we encourage you to do your due diligence and make sure you’re choosing a bank that’s not only right for you but is also capable of protecting your money for the long-haul. And that means making sure you can access your money no matter what happens.
Offshore banking in the Cook Islands could be interesting for people who already have trusts (or other entities) in the country and want to keep their financial assets within the same jurisdiction with a bank in Rarotonga.
But in most instances, there are alternative banking options that will provide more value, a wider selection of banking products, and more stable CBRs to ensure you can always access your money.
If you’re a high net worth individual, have a Cook Islands trust or offshore company, and are struggling to find banking solutions, we can help.
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