No licensed offshore finance industry Caution
No licensed offshore finance industry
New Zealand law does not provide for any form of officially sanctioned offshore finance industry. In particular, there is no provision for the licensing or supervision of any form of offshore financial institutions that are incorporated in New Zealand but provide financial services only outside of New Zealand.
What the law does do is empower the Reserve Bank to register banks and license non-bank deposit takers (NBDTs) that wish to operate in New Zealand.
Regulation of banks
Registered banks are the only type of financial institution that are permitted to call themselves banks. All financial institutions that apply to become registered banks must meet high quantitative and qualitative criteria in order to become licensed, and once registered they are subject to active ongoing prudential supervision by the Reserve Bank. A list of all currently registered banks is maintained on this website:
Regulation of NBDTs
The Reserve Bank also regulates and licenses non-bank deposit takers in New Zealand. The Non-bank Deposit Takers Act 2013 defines NBDTs as entities, other than registered banks, that: 1) offer debt securities to retail investors; and 2) carry on the business of borrowing and lending, or providing financial services, or both. This definition captures finance companies that raise funds from the public, as well as most building societies and credit unions. Under the Act, licensed NBDTs are required to meet prudential requirements that cover credit ratings, governance, risk management, capital, related party exposures, liquidity, and the suitability of their directors and senior officers.
Financial service providers register (FSPR)
New Zealand law also currently requires a financial institution that has a place of business in New Zealand to register on the FSPR (administered by the Companies Office) as a financial service provider if an entity wishes to carry on the business of providing financial services. Registration is not subject to any significant qualitative or quantitative criteria (except a prohibition on registering an institution that is disqualified on grounds such as being run by a person who is an undischarged bankrupt, or who has been convicted of certain offences). Registration itself does not mean there is any active supervision of the registered entity. However, some types of financial service provider (for example, authorised financial advisers and insurance companies) are regulated under other statutes.
NZ entities offering offshore financial services
Entities incorporated in New Zealand may provide financial services outside New Zealand without having to be licensed in New Zealand. Entities that do this are just ordinary New Zealand incorporated bodies with no special status, rights, or privileges under New Zealand law. They are companies or other forms of incorporated entity that are subject to normal New Zealand commercial laws in the same way as all New Zealand incorporated entities. New Zealand incorporated entities that provide financial services solely outside New Zealand are not supervised by the Reserve Bank, Financial Markets Authority, or any other New Zealand regulatory authority.
There are a number of New Zealand incorporated entities that operate in this manner, i.e. their business consists of providing financial services solely outside of New Zealand. These entities usually operate over the internet and have no (or limited) physical presence in New Zealand. They should not give the impression in their advertising material that they are a New Zealand regulated or supervised financial institution, because they are not.
The Reserve Bank does not hold any detailed information about New Zealand incorporated entities that provide financial services solely outside of New Zealand. They are not generally required to provide any prudential or financial information to any New Zealand authority.
However, corporate information about all New Zealand incorporated entities, including those that operate as described above, is available from online registers administered by the Companies Office. The Companies Register records when a company was incorporated, its registered address, the name and address of the director(s), and the name and address of the owner(s). It also has links to the original source documents such as the application to incorporate the company, changes of directors, and annual returns (which just lists the then current addresses, directors and owners). Information about other entity registers administered by the Companies Office can also be found on the Companies Office website.
If you want more information about New Zealand incorporated entities that provide financial services solely outside New Zealand, or have specific queries, contact the Reserve Bank at [email protected].