International Banks

International Banks in Puerto Rico were established through the passage of the International Banking Center (Law 52) of 1989, which was repealed in 2012 and in that same year the law of the International Financial Center (Law 273) was issued. The first law established International Banking Entities (IBEs) and the second created the legislative framework for International Financial Entities (IFEs).

The legislature sought to establish Puerto Rico as an international banking center, taking advantage of the strength of local and federal regulation, as the Commonwealth is within the United States’ jurisdiction, and provides a workforce of trained and bilingual support staff,  attractive tax incentives,  and a hospitable policy regarding inbound investment.

International Banking Entities (IBE) / International Financial Entities (IFE)

IBEs are depository institutions while IFEs tend to be more specialized institutions in other financial areas such as securities brokerage, financial advisory, etc. among others, that do not necessarily offer deposit-taking services.

Members of the Association of International Banks of Puerto Rico are all depository institutions, subject to stringent capital requirements and broad operational and compliance controls.

Regulation

The Office of the Commissioner of Financial Institutions of Puerto Rico (OCIF) supervises both international, local and mortgage banking in Puerto Rico.

Puerto Rico is considered the equivalent of a State as defined in the Federal Deposit Insurance Act because, according to the Act, “[t]he term ‘State’ means [inter alia] any State of the United States, the District of Columbia, any territory of the United States, [or] Puerto Rico.”  12 U.S.C. § 1813(a)(3).  Accordingly, International Banks must follow all U.S. federal banking regulations including the below:

• Bank Secrecy Act
• USA Patriot Act
• Sanction Lists promulgated by the Office of Foreign Asset Control of the U.S. Department of the Treasury (OFAC)

In addition to any other applicable regulations, in accordance with the products and services offered by each institution that rule:

• Office of the Comptroller of the Currency (OCC)
• Federal Deposit Insurance Corporation (FDIC)*
• Financial Crimes Enforcement Network (FinCEN)

* Currently, no Member is FDIC-insured, but even so, OCIF consults the policies, manuals and recommendations from the FDIC as a guide to exam International Banks in Puerto Rico.

Some International Banks maintain accounts at The Federal Reserve Bank of New York, as Puerto Rico is part of the Second District which the FRBNY represents in the Federal Reserve System.  Members that maintain accounts with the FRBNY must adhere to requirements under the Federal Reserve Bank of New York Account and Financial Services Handbook.