It is reported that due to the new regulations of Vanuatu VFSC, a large number of offshore brokers have recently withdrawn from Vanuatu and canceled the Vanuatu VFSC license.
The new rules require Vanuatu-regulated brokers to open new offices in the country and appoint local managers and directors. This provision will come into effect on October 16. After the new regulation takes effect。
DBG Markets Shield Bo
Universal Dragon DUHFX
IRC Groups Limited
The above 16 brokers have canceled the Vanuatu VFSC license successively.
Vanuatu VFSC used to be one of the favorite offshore licenses for offshore brokers. Its loose financial regulation attracted more than 600 brokers at its peak in 2017. However, fraudulent practices by several of these locally licensed brokers led the Financial Action Task Force (FATF) to graylist Vanuatu.
International money transfers, foreign direct investment and correspondent banking in areas placed on the FATF gray list will be complicated as other financial centers around the world may impose a blockade on those included. National Australia Bank, once a close business partner in Vanuatu, closed its correspondent account there.
In order to be removed from the “grey list” as soon as possible, Vanuatu has enacted or amended dozens of laws in just 2 years, including Amendment No. 11 of the Securities Dealers (Licensing) Act (2017), VFSC – Remittance instructions, Amendment No. 8 to the Companies and Trust Service Providers Act (2017) and more.
In 2018, the Vanuatu VFSC tightened regulations, requiring all brokerage firms to post a 5 million Vatu (approximately US$50,000) bond as well as certain other requirements. In June, the FATF formally removed Vanuatu from the list of “high risk jurisdictions” due to significant progress in anti-money laundering and countering terrorist financing.
The tightening of regulation has sharply reduced the number of brokers licensed in Vanuatu to about 150 in 2020. Up to now, the implementation of the new regulations in October is another heavy blow. Due to the increase in the cost of maintaining the VFSC license, by December this year, there were only 79 VFSC licensed brokers in Vanuatu.