The Southwest Pacific island nationVanuatu is notorious for being the offshore place of choice for many CySEC-regulated brokers who practice “offshore onboarding” through an offshore entity equipped with a Financial Dealer License from the Vanuatu Financial Service Commission (VFSC), bypassing regulatory requirements of ESMA and CySEC. Typically, these offshore entities only have a P.O. address in Vanuatu but no operation. FinTelegram reports that by the end of 2022, all securities brokers will have to move onshore and make tangible investments.
The new VFSC requirement includes the physical presence of at least one direct employee who matches a ‘fit and proper‘ definition. Those who deal in digital assets must have three people onshore, one of whom is the CTO, along with a minimum capital of US$500,000, a custodianship license from another jurisdiction, and an established track record.
In other words, a single P.O. Box and some accounting entries won’t cut it anymore to operate in Vanuatu. Our government wants to bring the offshore industry back onshore to spur investment in the country, create jobs, stimulate further development, and support education and training.Martin St-Hilaire, Chair of the Financial Markets Association of Vanuatu
According to FinTelegram, these stricter license requirements are another step in Vanuatu’s ambition to implement a top-tier financial industry. Vanuatu has upgraded its monitoring and regulatory systems and its legislation to meet global standards and the Financial Action Task Force (FATF).