Vanuatu is a small Pacific island nation which is well known for its offshore financial services. In recent years, it has become a popular destination for all sorts of Forex brokers who want to operate under a license but without considerable restrictions imposed by such jurisdictions as the United States, Europe, or Japan.
The Vanuatu Financial Services Commission (VFSC) is a government agency that regulates non-banking financial sector in Vanuatu and keeps the country's register of companies. The VFSC was established on December 20, 1993, based on the Vanuatu Financial Services Commission Act No. 35 of 1993.
Publish notices of fraud certificates. In July 2021, the VFSC published a notice about fraud certificates of the financial dealer license used by 24 companies.
Issue a fine not exceeding 125 million VUV.
Revoke a license. On July 4, 2019, the Commission issued a notice about its intention to revoke the financial dealer license of Capital City Markets Ltd. The cited reasons are complaints of suspicious activity, problems with withdrawals, failure to respond to the Commission's letters.
Impose conditions on a license.
Apart from the Vanuatu Financial Services Commission, you might encounter a mention of the Vanuatu Financial Centre Association (FCA). Established in 1993, the FCA isn't a regulatory body but a non-profit organization, which is registered with the FSC and represents members from banking, insurance, real estate, online trading, brokerage, financial dealing, accounting, business advisory, and legal industries.
The Financial Centre Association is working tightly with law makers, regulators, policy makers, and government to promote the position of Vanuatu as one of the leaders in the international financial arena. In other words, the FCA makes sure that the regulatory environment remains attractive to its members and that those members don't do anything stupid that would jeopardize Vanuatu's reputation as a financial center.
Membership in the Vanuatu Financial Services Commission is completely optional.
Similar to the Financial Centre Association, the Financial Markets Association (FMA) of Vanuatu is a charitable organization licensed by the FSC. It is working as a self-regulatory organization (SRO) exclusively for financial dealer license holders in Vanuatu.
As is the case with the FCA, it is not necessary for a company holding a financial dealer license to become a member, however, this improves the possibilities for the company to influence future legislation for the sector and to work with other members on bettering of the Vanuatu as a jurisdiction for Forex broker regulation.
The FMA of Vanuatu was founded on October 9, 2020. As of September 22, 2021, the Association's membership is composed of 12 FSC-regulated brokers.
The Vanuatu FSC looks quite attractive from brokers' perspective as their licensing requirements are much simpler and cheaper than those in developed countries. At the same time, looking at the lack of serious regulatory enforcement notices signals the lack of serious oversight work, which is what retail Forex traders really need. Yet, it is evident that the country's FSC is doing steps in the right direction and is working on making its financial dealer license a viable alternative to many other offshore offerings.
If you want to share your opinion, observations, conclusions, or to ask a question regarding the Vanuatu Financial Services Commission (VFSC), feel free to start a discussion on our Forex forum.
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