In case you’re a new Forex broker, getting a Forex-license is the first thing you’ll need to do. Licensing will require companies to comply with strict regulation basis, and having a license will positively impact the operational and financial success of your business. Offshore spaces are attractive to entrepreneurs: they offer almost zero tax rates covered by certain nuances and parameters of the selected country.
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Jurisdiction-specific Forex licensing requirements
Now everyone who wants to get this certificate offshore must register as a person who is subject to AML/CTF reporting. Among the main condition list are next-mentioned.
- Compliance adaptation. In simple terms, this means that the Statute of the financial company, its staff and directors must fully meet requirement list of legislation of chosen jurisdiction. To monitor compliance, a special compliance officer is appointed from among persons who do not have residence of country.
- Acceptance and compliance with KYC policy. For this, specific documentation is being developed, which all employees of the enterprise must study. In addition, personnel must complete an annual AML/CTF training course.
- If employees or a member of the directorate notice a violation of the rules, the use of funds in fraudulent ways, theft or suspicious activity on accounts, they must immediately report this.
A specific work plan is created bearing in mind the peculiarities and legal form of the applicant company.
If you are just starting out as a broker, first thing you need to consider is where to open your brokerage business-project. Location of your operations doesn’t have to be the same as your firm. In terms of official establishment, there’re various complexities involved in trying to obtain a license related to costs, annual license fees, deadlines, laws and taxation, to name a few.
In addition to participating in the market, the owner of the document has the right to buy securities and sell them, and he/she can manage the financial clients’ funds on their behalf on the grounds prescribed in the legislative regulation.
- This license is issued not only to dealers, but also to brokers, hedge funds, fund management and investment organizations. Any company whose clients have the ability and desire to finance in securities can apply.
- A company established offshore and having received appropriate licensed permission has rights to invest funds on behalf of foreign investors in foreign enterprises and valuable assets.
- The Forex (click here) product has already been rated by hundreds of dealers and brokers, which speaks in its favor. These tools are easy to use, and provide great privileges and prospects for business-structure progressing.
Popularity of offshore spaces in issue of issuing permits is simply explained: the world economy is making the rules for issuing permits more complicated every month and tightening requirement list for applicants. As a result, small and medium-sized business-structures in this industry lose all their opportunities, and certified ones are available only for large companies, which leads to market monopolization. Zones such as offshore are loyal to small and medium-sized businesses, which gives these firms opportunity to stand on a par with large organizations.
Categories of Forex-licenses
Regardless of level of license, such a broker is in charge of its clients: both financial and legal. If brokers go bankrupt or some other unforeseen deal occurs, the regulator and the law protect the trader/investor and help recover lost deposits from the broker’s reserve fund. Therefore, without exception, traders and investors are advised to work only with brokers that have a valid permission.
- A-type permit is the most difficult to obtain. It’s permission of Switzerland and America.
- B-type: Australia and UK.
- C-type: New Zealand, Cyprus and Malta.
- D-type permits: Cayman or Virgin Islands, Vanuatu, Belize and Labuan, that is, offshore spaces. Rules set by any regulator in these jurisdictions are easier.
Submission and application process
If you are a brokerage structure owner intending to prepare for a permit-getting, bear in mind following issues:
- in which part of the world the company intends to operate;
- how much time do you allocate for broker registering as a management;
- in which bank accounts will be opened;
- how much money is available to complete all legal transactions.
This will help you understand your options and plan your next steps. Thus, the first step on this path should be creation and establishment of a company in a loyal country. Next step is opening a bank account.
An experienced and qualified adviser is needed when taking such important steps. It is best if it is our specialist, who not only has information in the field of creating investment companies, dealing hubs and FX-brokers, but also has earned a good reputation among clients. Next-mentioned document list will be needed:
- Notarized copy of the passport
- Proof of residence (utility bills, bank statements for the last three months)
- CV and a detailed resume describing work experience, education and other information
- Confirmation of the required education of directors and shareholders
- Letters of recommendation from a lawyer, banker, accountant
Thus, first you’re reflecting on deciding on the country where you will receive a Forex-license. It’s worth paying attention to the fact that registration place of your firm and country in which you plan to get a permit don’t have to be the same, but in different regions the licensing condition range may differ, as well as the price for them.
Forex trading is a rapidly progressing industry that attracts more entrepreneurs every year. It is important to note that advantages of offshore companies for getting this type of permit make it possible to conduct business officially, however, with a minimal tax burden.