Vanuatu Forex License

Advantages of the Vanuatu Forex License

Banking, forex trading, and company registration make up the offshore financial services for which Vanuatu has become well known. These services help make the country attractive to international business seeking favorable offshore jurisdictions. While Vanuatu’s location in the Pacific Ocean is remote geographically, it provides access to the markets in Asia, Australia, and New Zealand that are going to be very important for a business trying to place a foothold within those markets. Being one of the official languages of Vanuatu, English means that communication with international businesses and investors is well served.

Such measures put in place by the government attract foreign investment, which includes less bureaucracy. Getting a Vanuatu forex license generally means going through a relatively smooth and efficient application process, with lower costs associated with obtaining and maintaining the license. This generally enables the forex companies to get their operations up and running more quickly compared to some other jurisdictions that have more complex procedures and can also optimize operational expenses.

The relaxation of exchange control in Vanuatu allows for a kind of environment that is really conducive to international financial transactions, especially with regard to forex companies. It therefore means that business entities operating within this country can transact with their partners, clients, and investors with less bureaucratic obstacles or restrictive regulations. Furthermore, Vanuatu does not limit the types of currency a given business can transact in by its exchange controls. This enables forex businesses to deal in a wide variety of currencies to satisfy a wide range of needs and goals amongst their clients and investors.

It provides a low-tax regime, probably the most favorable tax regime for any Forex-friendly jurisdiction. No Corporate Income Tax is payable, added to no Personal Income Tax, no Capital Gains Tax, no VAT, and no Withholding Tax. Among other reasons, this fact has made Vanuatu an excellent destination to get better results for their businesses, retaining more profit with them than could be an immense addition to the overall financial well-being of a company and staff.

Another noticeable impact on the economy and offshore financial center attractiveness of the jurisdiction is made by the banking and financial services sector of Vanuatu. Among the licensed international banks, several leading ones offer a broad range of services such as multi-currency accounts, electronic banking, and international money transfers. Simultaneously, the banking sector of Vanuatu manages to keep a good balance of transparency and compliance with international requirements while offering complete privacy and confidentiality for clients. The latter is a point of special interest for businesses and individuals in need of discreet financial services.

Advantages

Forex Regulations in Vanuatu

The activities of forex trading are controlled according to international standards by The Vanuatu Financial Services Commission (VFSC). Among others, the main tasks of the regulator include: providing licenses, ongoing monitoring and supervision of the activity of licensed businesses, protection of investor and consumer interests, combating money laundering and financing of terrorism. The VFSC tries to ensure that theForex trading activity is realized in a non-discriminatory and transparent manner, in substantive compliance with the applicable law. The authority licenses and supervises forex businesses under a number of national legal acts and regulations.

The following legal acts are or may be applicable to Vanuatu forex businesses:

• Vanuatu Financial Services Commission Act No.35 of 1993 (VFSC Act)
• Anti-Money Laundering And Counter-Terrorism Financing Act No. 13 of 2014
• Anti-Money Laundering and Counter-Terrorism Financing Regulations
• International Companies Act [CAP.222] and Amendments
• Companies Act No.25 of 2012
• Offshore Limited Partnerships Act No.39 of 2009
• Business Names Act [CAP 211] and Amendments
• Exchange Control Regulations
• Electronic Transactions Act No.24 of 2000 and Amendments
• Financial Dealers Licensing Act [CAP 70] and Amendments
• Financial Dealers Licensing Rules

The important legislations governing the licensing of the dealers in securities, including forex brokers, are the Financial Dealers Licensing Act [CAP 70]. It lays out the permissible activities that a licensed dealer in securities, including forex brokers, may engage in. It also prescribes the requirements and procedures for obtaining a forex license in Vanuatu. It provides the qualification requirements, capital requirements, and fit and proper requirements of directors and shareholders, among others, which a forex broker should have to qualify for a license. The act also incorporates provisions for mechanisms of enforcement, penalties, and fines in the event of failure to comply with the requirements regarding licensing, among other regulatory provisions.

It erected the Financial Intelligence Unit and obliged the financial institution- and, hence, forex brokers-to carry out professional customer due diligence; identification of customers, understanding the business relationship, evaluating the risks associated with the very customers. It also prescribes EDD requirements, risk assessment, record keeping, and reporting of suspicious transactions. It also contains provisions constituting penalties and enforcement actions against financial institutions that do not comply with such requirements, which may include fines or the revocation of licenses.

Vanuatu

Capital	Population	Currency	GDP
Port Vila	300,019	VUV	$3,252

Types of Vanuatu Forex Licenses

Within the Vanuatu jurisdiction, there are a number of different license types for forex, which best fit various business models and operational needs. The license allows a forex broker to legally exercise rights to conduct activities connected with forex trading in the jurisdiction and has a number of different requirements and benefits with each. You are free to choose any of the licenses, depending on your business goals, target market, and operational strategies. Our team of lawyers here at Regulated United Europe can assist you in carefully evaluating your forex business and advise on the most feasible solution.

The main types of Vanuatu licenses are as follows:

• Dealing in Foreign Exchange (Principal’s) License is specifically fit for forex trading business since it is actually set out for forex trade.
• This license allows flexibility regarding forex trading conditions, and thus it can provide the possibility of serving clients interested exclusively in forex trading.
• Dealing in Foreign Exchange (Client’s) License – a license similar to the previous one; however, this license type is for forex brokers acting as intermediaries between client forex trading.
• This license places the focus on offering clients forex brokerage services and gains access to forex trading platforms and liquidity providers.
• Dealer in Securities (Principal’s) License is suitable for forex brokers that engage in market-making activities and operate as principals in trades with clients. This license permits market-making and proprietary trading, allows offering a wider range of trading instruments beyond forex, including CFDs, indices, and commodities, and also gives flexibility in setting trading terms and spreads.
• The dealer in securities, a client’s license, would be relevant for those forex brokers that act as an intermediary, undertaking an obligation to act on behalf of the clients’ interests against other market participants. It provides an opportunity for the holder to concentrate efforts on brokerage services for clients, provides access to the liquidity providers and trading platforms for order execution, and gives an opportunity for offering tailored trading solutions for clients.
• Dealing in Derivatives License is for brokers dealing in any form of derivatives, including forex derivatives. This license provides the holder with the ability to offer a range of derivative products, including forex options, futures, and other derivatives, along with access to a wider scope regarding trading strategies and risk management tools.
• Derivatives (Client’s) License: as the very license similar to the one above, is a derivation that brokers use if they facilitate their clients’ trading in derivatives. The license focuses on client-centered services of trading in derivatives and opens a possibility for providing varied exposure in this aspect of derivative instruments.

According to the Financial Dealers Licensing Act [CAP 70], a Vanuatu forex license is generally issued for one year starting from the date mentioned in the license. As for license extension, the extension process should be begun as soon as possible and the deadlines set by the authority followed with care to prevent any interruption of forex operation activities.

Requirements of Applicants for Vanuatu Forex License

The first step toward getting a forex license in Vanuatu is the incorporation of the company that will be a legal vehicle for carrying on forex trading activities. Legal structures that you could use include but are not limited to an International Business Company (IBC), Limited Liability Company (LLC), and Partnership. Most license types require the forex company to establish a physical presence on site-the Vanuatu house, office, or representative.

The minimum capital requirements for the granting of a Vanuatu Forex License are different, depending on the type of license applied and the scope of the activities allowed by such license. For example, the Principal’s License requires that 5 mill. VUV (about 38,600 EUR) be deposited continuously with the authority and be repayable to the company under specific circumstances.

The license application fees are approximately 10,000 VUV (approximately 76 EUR) for a Client’s License and approximately 20,000 VUV (approximately 155 EUR) for a Principal’s License. These are to be paid upon the submission of an application. Moreover, the license is issued by the authority only after the payment of a license fee, which starts from 25,000 VUV for a Client’s License and reaches 50,000 VUV for a Principal’s License. To get the exact fees applied in respect to a particular type of Vanuatu forex license, please contact our team here at Regulated United Europe.

FOREX LICENSE IN VANUATU

Other key requirements for Vanuatu forex license applicants are outlined below, among others:

• The Directors, officers, and shareholders of the company should meet the VFSC’s fit and proper criteria including integrity, competence, and financial soundness.
• Must have the relevant technological infrastructure, trading platforms, and systems to support forex trading activities and provide a seamless experience to clients.
• Be able to put in place a sound risk management framework and have the capability to manage operationally and financially the risks involved in forex trading.
• Develop programs for AML/CFT to prevent illicit financial transactions.
• Have an appointed compliance officer accountable for monitoring activities of compliance with regulatory requirements.
• Have arrangements for the protection of client funds and ensuring the segregation of money from the clients from the firms’ operation funds.

The following documents are required for the application of a forex license in Vanuatu:

• A Certificate of Incorporation
• A Memorandum of Association
• Articles of Association
• Evidence of a physical presence in Vanuatu
• A detailed business plan explaining the intended forex trading operations and target markets, marketing strategies, growth plan, etc.
• An application form provided by VFSC
• Proof of payment of applicable fees
• CVs of company directors and shareholders
• Proof of experience and professional references for the company directors in the forex trading industry; audited financial statements to indicate the applicant’s financial stability and competence to conduct forex activities;
• Well-documented AML/CFT policies and procedures;
• Evidence of a detailed risk management plan that elaborates an appropriate risk management framework showing how the applicant will mitigate operational and financial risks related to forex trading.
• Operational infrastructure documented, including technology, trading platform details, as well as IT systems and cybersecurity measures.

Best forex brokers in Vanuatu

How to Open Forex Company in Vanuatu

To open a forex company in Vanuatu, you can choose from several legal business structures according to your goals and scope of business. Among the most popular ones with international business people is the International Business Company (IBC), as its incorporation is rather simple, and there is a lack of bureaucratic obstacles involved. On the other hand, such a company isn’t allowed to continue business in Vanuatu.

This structure enjoys the benefits of eligibility for Vanuatu’s tax regime, considered favorable; provides for a reduction of reporting obligations. It does not require the filing of audited financial statements or annual returns to the VFSC. Data about shareholders, directors, and beneficial owners will not be made public, thus ensuring the utmost level of privacy and confidentiality. An IBC can be registered within one working day, provided all the documents are well in advance prepared and submitted with due regard for all the legal requirements. Please consult our team to ensure a smooth incorporation process.

Unlike most other forex-friendly jurisdictions, there is no strict requirement that an IBC must have a local bank account for the conduct of the forex activities. The offshore financial environment of Vanuatu mostly tolerates IBCs to operate their accounts within Vanuatu and internationally within key financial institutions. Indeed, a decision to open or not to open an account with a local bank shall depend on the nature of your activities, operational needs, and regulatory considerations.

The minimum essential requirements of an IBC are as follows:

• At least one shareholder
• At least one director
• A registered office in Vanuatu where legal documents may be served
• A resident agent in Vanuatu who is empowered to represent the company

The necessary procedures for registering a new company in Vanuatu are as follows:

• Choose and reserve a unique company name under the Business Names Act [CAP 211] and other applicable statutes.
• Choose an office in Vanuatu
• Appoint a resident agent
• Prepare the necessary documents
• Submit the application form along with the required documents to the VFSC
• Pay the incorporation fees prescribed by the VFSC
• The Certificate of Incorporation will be provided once an application is successful by the VFSC

Normally required documents to incorporate a forex company in Vanuatu include:

• A Memorandum of Association
• Articles of Association
• The application for reservation of name
• Proof of identity and address of directors, shareholders, and beneficial owner
• CVs of directors and shareholders
• AML/CFT policies and procedures
• A comprehensive business plan
• A Fit and Proper Declaration by company directors and shareholders
• Proof of compliance with capital requirements
• Proof of paid application fees

How to Apply for a Vanuatu Forex License

Besides that, the usual time frame for a Vanuatu forex license application takes 3 months. However, it might vary depending on aspects such as the complexity involved in the application package, the type of license that a person is applying for, and the quality of any documentation submitted. Additionally, this might depend on how busy the VFSC is.

The application package will be put together, which will involve an application form and supporting documents. Submit the application package to VFSC following their guidelines. The VFSC will make a fit and proper assessment of the company directors, shareholders, and beneficial owners. VFSC may request additional information or clarification or modification of the application. VFSC grants the forex license if the application is successful in passing the assessment.

While the exact procedures may vary with the license applied for and the quality of the application, the review process of the VFSC of applications remains in line with ensuring that forex businesses in Vanuatu are credible, compliant, and able to maintain the integrity of the financial services sector.

Ongoing Requirements for Vanuatu Forex Licensees:

After obtaining a Vanuatu forex license, it is most important to continue with compliance from the regulatory requirements. A forex licensee is obliged primarily to provide regular reports to the VFSC, which detail financial performance, trading activities, and information related to the client accounts, among other relevant information. All licensees must keep the capital at all times to ensure sufficient financial resources to cover possible losses and risks arising from forex trading activities.

In respect of operational infrastructure, Vanuatu forex licensees are expected to have appropriate reliable trading platforms, risk management systems, and technology infrastructure that ensure security and integrity in client transactions. Interest of the client should also be protected by making sure there is transparent pricing, fair dealing practices, and adequate disclosure of risks concerned in forex trade.

At all times, Vanuatu forex licensees shall be compliant with the following AML/CFT requirements:

• Perform regular risk assessments to identify and rate the risks of money laundering and terrorist financing that the operations of forex might be exposed to.
• Ascertain the identity of each client, evaluate the possible risks associated with the customer, and perform enhanced due diligence in some cases when higher risks are identified.
• Keep actual and updated records of customer identification, transaction details, and other related information.
• Report suspicious transactions or activities, which may be indicative of money laundering or terrorist financing, to the relevant authority.
• Identify and apply special attention to those clients who are PEPs, as such persons may present higher corruption risks.
• The training to be given to the employees of the Forex Company regarding the understanding of AML/CFT regulations and identification of suspicious activity signs is important.

If you would like to start forex trading and get a forex license in Vanuatu, our team here at Regulated United Europe will be pleased to assist you with the incorporation of the company and the license application. Having legally dedicated advisors, tax experts, and financial accountants right by your side, you will find acquiring a forex license in Vanuatu easy, frictionless, and transparent. Contact us today to arrange a private consultation, and get ready for long-term success.

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