Comoros Islands Forex License

The Comoros Islands, or the Union of the Comoros, is a group of islands lying in the Indian Ocean, southeast of the African continent, east of Mozambique, and northwest of Madagascar. Lately, it has been gaining recognition as a favorable jurisdiction for international forex businesses. While more and more countries that previously had favorable conditions for forex startups are raising regulatory pressure or adopting new regulatory frameworks, the Comoros Islands are gaining a reputation as the cheapest and fastest way to receive a forex license.

Advantages of the Comoros Forex License

The local regulatory authorities of Comoros Islands thus play a very significant role in attracting forex businesses to their jurisdiction and supervising them under local but internationally recognized regulations. Against the backdrop of strict regulatory frameworks, the regime of Comoros Islands is unique for its flexibility and responsiveness toward changing market dynamics and newly emerging risks. With this, the country rather quickly responds to new challenges and meets changing demands put on it by a globalized and technologically enabled financial market.

Therefore, this flexible approach to regulation has the Comoros Islands programmed as a soft enabler of growth and innovation within the forex industry, whereby forex businesses can now navigate through with greater agility-a context that has precedents in place to protect the interest of the market participants and the wider financial ecosystem. Therefore, a Comoros forex license is regarded as being issued to forex businesses that are reasonably regulated and hence trusted and credible financial service providers.

At the same time, the Comoros Islands Forex license is more reasonably priced compared with a lot of other licenses due to relatively cheap licensing fees and operational costs that enhance profitability of a Forex business. Besides, the Comoros Islands have relatively prompt licensing, which enables forex businesses to initiate operations sooner in order to quickly respond to market opportunities.

It is also the site of one of the most favorable taxation frameworks in the Comoros Islands. The offshore company does not pay Corporate Income Tax, and the Capital Gains Tax connected with the sale of the assets, including currency and financial instruments, does not exist, which leads to tax savings for forex traders and investors. Besides, in the majority of cases, the dividends distributed by an offshore company are not subject to the Withholding Tax, and the provision of financial services, including forex trading, is exempt from VAT.

You’ll also be glad to hear that in Comoros, there are no exchange control restrictions, which opens up various advantages. First, it allows forex brokers to move funds freely in and out of the country without cumbersome regulatory hurdles. It goes ahead to enable forex businesses to avoid additional transaction costs due to currency conversion, administrative procedures, or compliance requirements related to foreign exchange transactions. Most importantly, absence of exchange controls in Comoros Islands allows unlimited access to international financial markets and gives every forex business unlimited access to the range of currencies, assets, and trading opportunities available.

Forex regulation in the Comoros Islands overview

Comoros Islands Regulations in Forex Trading

The Union of Comoros includes 3 independent islands, which are the following: Mohéli, Anjouan, and Grande Comore. According to the Constitution of the Comoros Union, every island enjoys full autonomy at least in the establishment of its own Constitution, in the appointment of a President or Governor, and in the organization of its own Parliament. Every island, therefore, is a separate jurisdiction with its own regulatory authorities.

Each one of these regulatory bodies has different rules, regulations, and various licensing conditions for a Forex company operating in its island of jurisdiction. Forex startups often look to get a forex license from Mohéli- and Anjouan-based regulators. However, each jurisdiction should be looked at separately before choosing an operational base within the Union of the Comoros. Our team here at Regulated United Europe can counsel you with regard to your particular business case and the best decision.

In this essay it shall suffice that the Mwali International Services Authority or best known by its acronym MISA, is one of the regulating entities in charge of licensing and overseeing forex businesses operating from the Comoros Islands. Its principal functions are licensing and strict supervision of the forex businesses that chose Mohéli as their base of operation. Nowadays, the authority applies a light-touch approach with limited supervision and lenient legal requirements when processing applications for forex licenses.

Anjouan is already an offshore financial center that has better development. The government agency of this island, in general, regulating the financial sector and forex businesses, is called the Anjouan Offshore Finance Authority, AOFA. Ensuring the integrity and stability of the offshore financial sector, AOFA regulates providers of financial services through due diligence requirements that prevent financial crimes, safeguard client funds, and guarantee transparency. Like the MISA, the AOFA currently exercises minimal supervision, with relatively easily satisfiable legal requirements and a quick licensing process.

Concerning specific regulations, each financial regulatory body of the Comoros Islands has respective requirements listed as follows:

• Anti-money laundering and combating the financing of terrorism, including the application of know-your-customer policies and procedures.
• Clients’ funds protection: It includes the separation of clients’ accounts from the operating accounts in such a way that, in case of declaring insolvency or financial difficulty, the client assets are safe.
• Complaints handling: This includes adoption of adequate mechanisms for the settlement of disputes arising between any particular financial institution and its customers, with a view to the fairness and impartial resolution of disputes.
• Financial reporting and audit: This includes recording proper books of accounts and filing regular reports with the regulatory body.

Types of Comoros Forex Licenses

Forex businesses must obtain a license from the local regulatory authority in order to operate legally within or from the jurisdiction of a given island. Essentially, from the standpoint of a target market for your forex business, you have 2 main types of Comoros forex licenses: an offshore forex license and an onshore forex license.

This license permits forex businesses to conduct their activities in the jurisdiction, but the clientele should, for the most part, fall outside the island and often outside the Comoros Union as a whole. Such a license is more affordable than an onshore license and is surrounded by fewer regulatory requirements. You can attract international clients with an offshore license and practice other forex trading activities, such as forex brokerage.

Onshore forex licenses are tailored for Forex companies to serve clients of a particular island’s jurisdiction or the Comoros Union at large. Basically, they tend to be more demanding in terms of regulatory compliance and participation in additional requirements peculiar to the jurisdiction in which the license is issued. In this way, if you are a Forex broker looking to target local or regional clients, this is your license.

Probably, the most in-demand type of Comoros licenses is the International Brokerage License, conducted for offshore activities. It is issued by MISA in Mohéli and allows conducting a variety of financial services, among them stock brokerage, futures trading, contracts for difference (CFDs), and other financial services related to that. The license is recognized by international banks, which provides good banking relationships and ease of conducting financial transactions. It allows flexibility in the choice of a business model and thereby enables forex brokers to carve their services to suit their target markets and clientele.

The AOFA in Anjouan issues an International Brokerage and Clearance House License that empowers holders with access to financial markets and exchanges. They are thus allowed to execute trades on behalf of their clients and settle the same with efficiency. Apart from helping to execute trades, this license will enable an enterprise to offer clearing and settlement services. Clearing is one of the most important steps in the whole trade execution process, which ensures that transaction settlement and asset transfer from buyer to seller are ultimately effected.

While both jurisdictions provide similar licenses, there are differences that may influence the establishment and growth of your forex trading company. Ultimately, the choice of license would depend upon unique conditions and priorities of the business. We therefore highly recommend consultation with our team of seasoned lawyers who will be happy to review your unique business case and offer practical suggestions.

Comoros Forex License: Requirements for the Applicants

Although the requirements for Comoros forex license applicants vary depending on the type of license applied for, island jurisdiction, and nature of the forex business in question, there are some key general ones you should be aware of right now. You would have to establish a company within the specific island jurisdiction where you intend to operate.

Afterwards, this local company would have to meet the following legal requirements:

• Have minimum capital as provided by the regulatory authority of the respective island – about 24 mill. KMF, approx. 50,000 EUR, though the amount shall differ depending on the license type and the scope of activities allowed by such license.
• Due diligence of the company’s directors and key personnel, including background checks, shall be performed with a view to enable the regulatory authority to be satisfied that the people associated with the business have good reputations and are not involved in any criminal activities.
• Commitment to the implementation of effective AML/CFT policies and procedures, including systems and controls to ensure that the identity of their clients is verified and all transactions are monitored for suspicious activities.
• Establish adequate procedures for risk management to safeguard the clients’ funds and ensure financial stability.
• License application fee: from 1,9 mill. KMF (approx. 3,800 EUR)
• Annual license fee: from 1,2 mill. KMF (approx. 2,400 EUR)

Following documents should be prepared by the applicants of Comoros forex license:

• Articles of Association
• A Memorandum of Association
• A complete business plan that should describe the forex trading activities proposed to be provided, the trading strategies to be followed, risk management procedures, means of soliciting clients, and projected income and expenses.
• Biographies of the founders, directors, and key personnel of the forex company
• Copies of the passports of the founders, directors, and other officials of the forex company
• Proof of financial capability to cover minimum capital requirements, such as bank statements
• Audited or certified financial statements for the past couple of years
• A breakdown of ownership of the business, including details of shareholders, ownership percentages, and any beneficial ownership information
• Proof that the company abides by AML/CFT regulations
• Details related to technology infrastructure of forex trading: Information regarding a trading platform, data feeds, cybersecurity measures, etc.
• A compliance manual detailing how the forex licensee will adhere to regulatory requirements and standards
• An operational plan detailing how the forex business intends to carry out its forex trading activities: staffing, office setup, compliance with regulations, etc.
• Proof of insurance coverage – it could be errors and omissions insurance or client fund protection insurance.
• Proof that the applicable license application fee and other relevant fees have been paid.

How to Set Up a Forex Company in the Comoros Islands

The incorporation of a new company in the Comoros Islands can be accomplished in two to four weeks. This includes, among other things, the drafting and presentation of the particular documents that will be required, submission to the relevant registrar of companies, and then wait for an answer on the approval of the setting up of a company. One of the most popular and widely used legal business structures for international business is an International Business Company or IBC. IBCs are generally set up based on their simplicity, flexibility, minimum reporting requirements, high level of confidentiality for the business owners, and tax benefits to non-resident owners. In Mohéli, one may register an IBC in the shortest time – in 24 hours.

The main statutory requirements of a Comorian IBC are as follows:

• At least one shareholder – individual or legal entity
• At least one director who can be the same as the shareholder
• A registered agent on the island where you intend to register your forex business.
• A registered office address on the island where you intend to register your forex business.

The major steps of opening an IBC on the Comoros Islands are as follows:

• Check with your target island’s government authority if your desired company name is available and also if it meets the naming convention and requirements.
• You need to appoint a registered agent who will be representing the company locally to whom all communications will be channeled on behalf of the company.
• Prepare all required documents for the set-up, including those proving you comply with national regulations. Mail everything to the registered agent.
• Pay the incorporation fees as prescribed by the registry of business for your island of choice.
• The registered agent will now register the company’s registration documents with the relevant registrar of companies on your island of choice.
• Apply for a forex license from the regulator once you have chosen your island.
• Create an account for your IBC in either the local or international bank to manage finances.
• Register with the local tax administration.

The following documents are required for the opening of an IBC in Comoros Islands:

• Memorandum of Association
• Articles of Association
• Notarized copies of the passports of the shareholders and directors
• Proof of address of every shareholder and director
• A comprehensive business plan
• Proof of possessed minimum required capital
• Information about the registered agent
• Documents outlining how the IBC will be able to comply with local and international regulations, including AML/CFT
• A letter from appropriate counsel confirming legality and compliance of the IBC with local and international laws

The documents can be prepared and submitted in English, which simplifies the registration process and facilitates communication with regulatory authorities. There is no requirement for physical presence within the Comoros Islands by individuals or representatives of the business to register a company, meaning that entrepreneurs and investors throughout the world are able to register an IBC in the Comoros without the need for extensive travel or relocation.

How to Apply for the Comoros Forex License

The procedure for the Comoros forex license is indeed very efficient and usually takes 2 to 4 weeks, depending on the quality of the application. This is really very fast compared to most other jurisdictions. Once issued, this license shall be valid for a certain period, which is at the discretion of the Comorian island’s regulatory body where it is issued, and can be extended upon renewal as long as the licensee continuously complies with the national regulations.

The main steps of the forex license application process in the Comoros Islands are as follows:

• Prepare all the required documents as specified by the regulator of the chosen island;
• Pay the applicable application fees;
• Submit the completed application form and supporting documentation to the relevant regulatory authority;
• Undergo due diligence and background checks.

In case the provided application wasn’t fully completed, the regulatory body can also request additional information or clarifications following the preliminary processing of your application package. Please feel free to contact our lawyers who will ensure that you obtain your Forex license in the shortest time possible as they’ll advise on how to avoid delays. Once the application is fully approved, the regulatory body proceeds with a Forex license issuance, which opens the doors to Forex operations.

Ongoing Requirements for Forex Licensees in the Comoros Islands

Once a forex license has been granted in the Comoros Islands, licensees are burdened with ongoing requirements as a means of ensuring that their operation remains compliant with locally set regulations and, in effect, can operate within the legal framework. Generally similar continuous supervision requirements and processes may be said to exist in Anjouan and Mohéli; however, there exist minor differences—thus generally speaking, here are some common rules every Comoros forex licensee ought to live up to.

About transparency and accountability, licensees in Comoros forex should maintain full, accurate records of all transactions, client information, and activities with regards to their finances. The Comorian forex regulatory body has also requested its licensees to submit periodic financial statements, transaction reports, and compliance reports as evidence of continued observance of the nationals.

License holders of a forex license in Comoros should implement strict AML/CFT procedures, including KYC. This means the due diligence on the verification of the identity of clients should be carried out by performing risk profiling, assessment of financial activities, and nature of transactions. It is also under obligation to continuously monitor client transactions in order to recognize unusual or suspicious patterns that may appear, which would also mean the scrutiny of large transactions, frequent transfers, or transactions with high-risk countries.

The other aspect of regular maintenance for the financial stability and compliance of a forex trading business in the Comoros would be the implementation and improvement of the risk management procedures in line with local legislation. The risk management procedures should be inclusive of limits on exposure, hedging techniques, and portfolio diversification. Besides this, it will be necessary to devise measures for liquidity risk management to provide assurance of adequate liquidity to meet the needs of the clients even in conditions of extreme volatility.

If you want to start forex trading and obtain a forex license in the Comoros, we will be happy to help you with the incorporation of a forex company and a forex license application here at Regulated United Europe. We can also take you through with confidence for the procedure of finding a viable forex license on sale and buying a ready-made solution in the shortest possible time.

The processes will be easy, frictionless, and transparent because dedicated legal advisors, tax experts, and financial accountants will assist you while opening a forex business in Comoros. Feel free to get in touch with your personal consultation to set the stage for long-term success.

Also, lawyers from Regulated United Europe perform legal services for a license in Lithuania crypto.