The list of jurisdictions friendly to forex entrepreneurship is constantly decreasing. Popular offshore companies, Seychelles, Mauritius, Saint Lucia, under pressure from the international community, adopted legislative amendments. Accordingly, the requirements for substance, organization personnel, and authorized capital have been introduced. Brokerage activities in these jurisdictions are subject to compulsory licensing.
For your information! Transformation on the offshore zone map leaves forex brokers fewer ways to set up a business. Chief among them now: a) obtaining a license of categories A, B, C or D, depending on the scale and needs of the business; b) registration of a company in St. Vincent and the Grenadines (SVG), where the FX business is not regulated. To implement the first path, it takes about three months of time and from 50,000 USD in cash investments. For a novice broker, such conditions are not entirely acceptable. Therefore, at the very least, it is worth carefully considering the option of Saint Vincent and the Grenadines.
Services for registration of forex-activities in Saint Vincent and the Grenadines are ready to offer experts of the Lawrange law firm . We are not talking about obtaining a license, since such a permitting document is not provided for by the legislation of this state. However, SVG brokerage is not prohibited. By registering a company with the appropriate profile in the country, you can legally provide broker services for traders all over the planet.
General features of forex business design
The foreign exchange market (forex) is the world’s largest trading environment. Entering the industry as a broker can prove to be an extremely profitable and rewarding move. In most jurisdictions, it is necessary to purchase a license to become a forex broker. The process of obtaining a license differs significantly in each country, so you should find out the specific requirements in the selected jurisdictions, and then finally decide on a suitable place to open a brokerage company.
For your information! The procedure for legalizing brokerage activities differs from country to country. Not only do the costs and requirements differ, but also the reputations of each jurisdiction. And reputation can affect the categories of clients that will then be attracted, as well as the ability to open an offshore bank account, have the right to conduct legal activities in certain jurisdictions.
Saint Vincent and the Grenadines does not require a license at all to provide services as an FX broker. However, working as an unlicensed broker is not suitable for everyone and not always. In addition, the top-tier jurisdictions in the United States and Japan are subject to stringent requirements and investment to obtain a license.
Benefits of unregulated forex for a beginner broker
It is customary for experts in legal support of international business to divide the forex market into regulated and unregulated ones. Only entities that have received the appropriate permits – forex license – carry out activities on the regulated market.
Note! There are four categories of FX licenses in use, from A to D. The cost of obtaining differs significantly. For example, if the cost of a Category A license in the United States is at least USD 20 million, then such a Category D permit in Vanuatu costs USD 50,000 (this should be the minimum authorized capital of a brokerage company).
However, even minimal costs for a forex start-up can be prohibitive. If you are planning to take your first steps as a forex broker, the best place to register a business in this area is Saint Vincent and the Grenadines. We are talking about registering a forex company without obtaining a license.
What is special about Saint Vincent as an offshore company? Why do we recommend starting in this jurisdiction? How can you then go to a higher level? Let’s go through it in order.
For your information! Saint Vincent and the Grenadines is a state in the Caribbean region, consisting of 32 islands. Even after recent changes in legislation, the country continues to be a place with favorable conditions for the incorporation of foreign business, including high-risk (High-Risk) activities.
Since 2018, the government of the state of Saint Vincent and the Grenadines has not licensed forex brokers. The financial services market regulator – Financial Services Authority St. Vincent and the Grenadines, SVGFSA – deals only with the registration of financial and investment companies with the issuance of appropriate certificates.
We emphasize! FSA does not issue licenses to conduct activities in the field of forex and binary options!
At the same time, according to the laws of Saint Vincent and subject to a number of conditions, such activities are not prohibited, that is, they are self-regulating. This is a unique jurisdiction of its kind.
What are the main benefits for novice brokers?
- the ability to start quickly: it takes 2 weeks to complete a turnkey business;
- no need for large initial investments: only on the license itself you can save from 50,000 USD;
- no need to “catch up” with strict AML rules;
- the ability to work completely remotely;
- minimum running and maintenance costs.
Subtotal
A novice broker, having set up a business on SVG, can afford to test certain strategies and solutions without excessive costs. It will be possible to work on the reputation later, after the full launch of the project. When the forex business starts to make a profit, you can take the next step – get a license in one of the EU countries or in any other jurisdiction of your choice.
For a newbie broker, obtaining a forex license is far from a priority task. It is more a question of marketing, raising the status in the eyes of traders. But a start-up company can allocate the money saved on licenses much more efficiently. For example, you can use funds to attract customers through low spreads, bonuses, profitable affiliate programs, gifts.
Warning from FSA – SVG Financial Services Market Regulator
Over the past couple of years, among those involved in the forex business, the issue of introducing new rules for regulating the relevant type of activity in Saint Vincent and the Grenadines has been discussed soon. There are reports of the imminent introduction of licensing of brokerage companies by the state regulator – the Financial Regulatory Authority of Saint Vincent and the Grenadines (SVG FSA). But nothing ever happens.
For reference! The state regulator SVG FSA was established in 2012. In general, over the years of activity, the structure has shown itself to be good. Its representatives approach the solution of specialized issues with a high level of professionalism, and showing the necessary competence.
From time to time on the official website of this state. body svgfsa.com warnings appear regarding brokerage or binary options trading. The most recent such warning appeared on June 23, 2021.
The main theses of the FSA warning regarding forex activities in the country:
- FSA does not issue any licenses to conduct forex business. Also, the FSA does not regulate, and does not control, International Business Companies (IBCs) that engage in such activities.
- International business companies registered in Saint Vincent and the Grenadines are free to engage in any commercial activity without FSA approval, unless the proposed commercial activity relates to banking, insurance or mutual fund activities.
- Brokerage licenses are not issued by any other government agency in Saint Vincent and the Grenadines.
- Forex trading and brokerage are related to currency trading. It is assumed that a person buys a certain amount of one currency by paying a certain amount of another currency. The trader mainly speculates on the future rate of a particular currency. Forex trading can be carried out from anywhere in the world, which only requires an internet connection.
- The FSA advises to beware of fraudulent forex trading where a broker offers high-yield, low-risk investment opportunities through investments in foreign exchange contracts. These deals may look like a new form of investment opportunity but are in fact a form of financial fraud targeting retail clients.
- Forex scams and scams usually look attractive. They are advertised in the media and on the Internet. Potential clients are often convinced that they will receive tens of thousands of dollars in just a few weeks for a small investment.
- Among the warning signs of forex fraud:
- promises that sound too good to be true;
- claims that most clients make money;
- unsolicited phone calls with investment offers, especially from unknown companies;
- fake success stories from fictitious customers;
- attempts to persuade to immediately transfer cash to the company via the Internet;
- promises of minimal risk: Forex futures and options markets are actually very volatile and always carry significant risks;
- promises of fixed income;
- promises to reimburse any loss the trader may suffer;
- Difficulty getting help.
- The FSA recommends against investing amounts that the trader cannot afford to lose.
- Before investing, you need to make sure that all procedures and risks are clear, and that the broker that attracts foreign exchange investments has a proper business history. FSA recommends working with licensed brokers.
- The FSA cautions that brokerages are required to disclose risk information in the appropriate client agreement details.
- If an organization is unlicensed and unregulated, traders use the services of such a broker at their own risk. Unregulated forex companies in the country are not subject to any law. There is no law in the country that explicitly prohibits companies from making statements that are misleading or false.
- Owners, directors and managers of brokerage firms are not subject to the FSA’s “compliance” test for regulated entities.
- Individuals who consider themselves victims of forex brokers are encouraged to contact the financial crime authorities in the jurisdiction of which they are resident.
Subtotal
The FSA, as the regulator of the financial services market in the jurisdiction of Saint Vincent and the Grenadines withdraws itself from the regulation of forex companies . Such an activity can be carried out. For the time being, FSA considers the only expedient step to streamline this area to warn potential clients of forex brokers about possible risks. There are no other restrictions for brokers yet.
Brokerage company on SVG + Europe: comfortable start of business
Constantly monitoring the area of high-risk international business, the experts of Lawrange JSC find the best solutions for their clients, which are then tested multiple times.
Important! We offer one of these solutions. So that you can start fully working in the Forex market as a broker with an acceptable investment of money and time, the following procedure is implemented:
Step 1.
Registration of a business entity (LLC) in Saint Vincent and the Grenadines is underway.
Step 2.
An enterprise is created in Europe, for example, in UK .
Step 3.
A corporate bank account or in a reliable payment system .
Step 4.
An agency agreement is concluded between these two companies. A business entity in the European zone acts as a paying agent of a broker.
Step 5.
Online payment is connected on the website of the brokerage company – money goes first to merchant account (trading account) , then – are transferred to bank account .
Important! The presence of a bundle of an offshore company on SVG + a company registered in Europe allows a broker to deploy activities quite quickly, inexpensively, and quite legally. This way of registering a business allows the broker to cooperate with reputable international payment systems and online banks, including Paysera or E-payments.
In connection with the increasing tendencies towards deoffshorization, both the majority of banks and payment systems prefer to conclude service contracts only with European companies. As a rule, cooperation with offshore companies is prohibited by internal AML policies.
Lawrange JSC services cover:
- registration of an LLC in Saint Vincent and the Grenadines;
- preparation of a legal opinion regarding the legality of activities without a license;
- registration of a company in Europe as a paying agent;
- preparing a package of documents for a forex broker website;
- connecting a merchant account;
- opening an account with a banking institution;
- take necessary actions remotely.
For your information! The total term for registering a forex business using this algorithm is from 2 weeks to a month.
SVG Company Registration Cost
Registration of a company in Saint Vincent and the Grenadines with a full set of apostilled documents is 1850 EUR
Receiving Legal Opinion for forex broker activities – 1000 EUR
Register EU agent to accept payments – 1350 EUR
Opening an account for a company – from 500 EUR
Activation of processing (acquiring) when buying a full set of companies from us – Free
Nominee Director and Shareholder – upon request.
LLC (Limited Liability Company) Registration
Until January 1, 2019, non-residents registered a business in Saint Vincent in the form of an International Business Company (IBC). But now such an organizational and legal form of business is not provided for in the legislation.
The most acceptable option for registering a business for non-residents today is LLC (Limited Liability Company), that is, a limited liability company (LLC).
What are the benefits of LLC registration?
- in case of doing business and making a profit outside Saint Vincent, taxes are not paid;
- the authorized capital is not specified, that is, it can be anything, up to 1 US dollar;
- the base currency for the share capital is US dollar, but you can choose another convertible currency;
- 1 director and 1 founder is enough (can be residents of any country);
- there is no requirement for mandatory filing of annual financial statements and audits;
- it is allowed not to submit information about the owners to the open register;
- a meeting of founders / members is allowed anywhere in the world;
- there are no requirements for a security deposit (for example, in Vanuatu it is $ 50,000).
For your information Saint Vincent and the Grenadines is a country where the principles of financial confidentiality are strictly observed. Back in 1996, the corresponding law came into force – Preservation of Confidential Relationships (International Finance) Act 1996.
Documents required to register an SVG company:
- completed company form (we provide);
- notarized 2 copies of identity documents (e.g. passport and driving license);
- notarized document confirming the address of the director / shareholder residence;
- bank reference for director / shareholder;
- director / shareholder bank statements.
Resolving issues with a merchant account and a bank account for a forex broker
For your information! A merchant account is an account that allows you to accept online payments on the company’s website from VISA, MasterCard, American Express bank cards, as well as customer bank accounts, payment systems, e-wallets. From a technological point of view, this is a special code for identifying a merchant (merchant) in a single space for electronic payments.
Acceptance of payments through a merchant account is carried out around the clock, on holidays and weekends. Human intervention in transactions is not required. Connecting a merchant account is a must-have step in starting a currency-related business. But a corporate account is also required for such a project.
Most banks and payment providers only work with European companies. They are not ready to open an offshore account, in particular, to work with unregulated forex. That is why it is proposed to register a company in the EU as a paying agent. But even with this situation, it is becoming more and more difficult to open an account for a European company in a physical bank at the moment.
Important! A convenient and proven alternative to a bank account is a payment system account (EMR). Payment Service Providers (PSP) is a fintech company that provides customers with non-cash money transfers (via online transactions).
In the the list of payment systems that Lawrange works with:
- UK : Wise, Bilderlings, Paystree, Emerald24, DynaPay, PayDo, LeoPay, PayOp
- Netherlands : Bitsafe Payments
- Cyprus : Unlimint (IT only)
- Malta : Hawex PLC, Paymix
- Czech Republic : Q-Pay
- Lithuania : Paysera, Genome, PayApp UAB, GlobalnetInt, PayPugs, Vialet
- Finland : Holvi
- Hong Kong : Sterling Payment Services
- USA : Payoneer (IT and e-commerce only)
*** Note: This list is not exhaustive. To get the latest information on the payment systems our law firm works with, please send a request for a commercial offer or for a personal consultation.
Conclusions
Saint Vincent and the Grenadines is not accidentally included in the TOP jurisdictions for starting a forex business. And while this situation remains relevant, lawyers and lawyers of Lawrange JSC recommend clients to take advantage of the opportunities.
While SVG legislators decide on the introduction of regulations for forex, you can manage to win a niche in the market, then, at your discretion, choose a jurisdiction for obtaining a license. Contrary to some beliefs, unregulated forex has its advantages. Even large players do not refuse it (in support of this thesis, you can see the list of brokerage companies registered on SVG).
