VFSC wants financial dealers to move onshore

Compiled by Germain Sam

The Vanuatu Financial Services Commission (VFSC) wants financial dealers to move onshore and invest in communities to create employment.

VFSC has imposed significant requirements forVanuatu Financial Dealer License (FDL) holders and one is the physical presence of at least one direct employee in the country.

The only exception to the physical presence requirements is small brokers with limited activity will be authorized to designate a Licensed Resident Manager, that is, hire a local consultant, instead of moving onshore.

The FDL holders must have three people onshore, one of them is their Chief Technology Officer because he will deal with digital assets.

The onshore office would operate with a minimum capital of USD 500,000 (VT56 million) and an established track record as licenses.

Chairman of the Financial Markets Association of Vanuatu, Martin St-Hilaire, said the government is prioritizing the local economy.

“Our government wants to bring offshore industry back onshore to spur investment in country, create jobs, stimulate further development, and support education and training,” he said.

The VFSC has established recently four categories of licenses, foreign exchange deliverable and debt instruments (Cat. A); corporate shares, precious metals or commodities (Cat. B); futures contracts and derivative products (Cat. C); and digital assets (Cat. D.).

The new FDLs will never have to be renewed; they will be perpetual with the VFSC reserving the right to revoke them at any time for non-compliance with the law. Existing licensees will have until October 16, 2022 to comply.

While the new compliance requirements may deter more than a few brokers from applying for a Vanuatu license that is precisely the goal of the VFSC.

“Our regulator wants to attract only the most serious applicants. If they are genuine in their intentions, and dedicated in their approach, and they intend to properly run their business in Vanuatu, the VFSC will be flexible and patient,” St-Hilaire explained.

The government has upgraded its monitoring and regulatory systems as well as its legislation, putting them on par with global standards, with the help of the Asia-Pacific Group on money laundering and the Financial Action Task Force.

Vanuatu is an active participant in all major global initiatives in the fight against tax evasion, money laundering and the financing of terrorism, and a willing adherent to the OECD’s Common Reporting Standard (CRS).

“The government wants to bring about a sea change in the way it does business, by transitioning from an offshore, protected financial Centre to an onshore, transparent Fintech centre,” St-Hilaire said.