Is a bank that provides cross-border services into a foreign country without being physically present in such country required to comply with such country's banking laws? Domestic legislatures in many countries have not addressed this issue, and the competent judicial and administrative authorities tend to rule on a case-by-case basis applying approaches that do not only lack consistency and predictability, but also appear to be unfounded if not arbitrary. This article attempts to analyze the problem in accordance with nationally and internationally acknowledged principles of legal methodology. It combines the interpretative guideline drawn from the purposes of banking regulation with the implications of the territoriality principle. Thereby, it develops a staggered solution that is flexible enough to embrace the relevant circumstances of the case at issue and clear enough to provide for a high level of legal predictability.
