The Government of Vanuatu has finally published the widely expected changes to the Dealers in Securities (Licensing) Act [CAP 70] (‘DSCA’) through the notification of the Dealers in Securities (Licensing) Amendment Act No 11 of 2017
(‘Amendment Act’) on 16 June 2017. The amendments have been brought to ensure that the legislation in the country complies with the AML/CTF standards, which have been prescribed by the Financial Action Task Force (FATF).
The changes in legislation can be broadly classified into three groups:
- Changes affecting new license applicants
- Changes affecting existing license holders and renewal applications
- Changes affecting all license holders and new applicants
In this article, we will focus on presenting the important changes in all three categories in a simplified manner to enable interested parties to comply with them. For readers who are learning about the possibility to obtain a Forex License from Vanuatu for the first time, we recommend you to visit our Vanuatu page to understand the context of this article and also know how a Vanuatu license can enable you to join the Forex business with minimum investment.
A. Changes affecting new license applicants
The first major change for new applicants of a Vanuatu Forex License applicant is that application for only a ‘Principal’s License’ is no longer possible. An application for a Principal’s License now has to be accompanied by an application for a ’Representative’s License’.
The second major change is with regard to the documents which need to be submitted for a Principal’s license and a Representative’s license. For a Principal’s License, the new Section 4 of the DSCA states that in addition to the old requirements of submission of Notarized Copy of Passport of the applicant, Police Clearance with notarized translation (if necessary) and the business plan, additional documents need to be submitted in the form of:
- A bank reference letter showing the proof of source of funds to pay the Capital and
- A bond of Ni- Vanuatu Vatu (VUV) 5 million (approx USD 50,000) to be deposited with the Vanuatu Financial Services Commission (VFSC)
- The statement shows in detail the exact activity which will be carried out under the license and information on the products which will be provided by the applicant
- The latest profit and loss report audited by an independent auditor and certified by a Public Notary if the applicant has been operating for more than 12 months from the date of application
- A detailed overview of the internal organization, controls, and corporate governance including information on the manner of keeping books and records showing receipt of investments and the mechanism for withdrawal of the instrument including on maturity.
- A report from an independent certified risk assessment professional stating compliance with Anti- Money Laundering (AML) and Counter-Terrorist Funding (CTF) regulations.
- disclosure regarding internet-related or e-commerce businesses of the licensees (if any)
- resolution of directors appointing the Representative of the Principal Licensee
- declaration which states that the applicant (and directors, if any) are unaware of any information which may cause the Commissioner to doubt the competence, integrity, or financial resources of the directors, applicant, and Representative or their ability to undertake business as per provisions of the DSCA.
Depending upon whether the applicant is a corporation or a natural person, there is a requirement for the submission of additional documents. In case, an applicant is a natural person, the applicant has to provide certified copies of academic transcripts, curriculum vitae (CV), and independent references from two persons. For an applicant which is a corporation, the documentary requirements are more detailed and include:
- Certified copies of registration and license in the home and/or foreign jurisdictions.
- Statement of director outlining the financial standing and assets and liabilities of the Company.
- A ‘professional indemnity cover’ for the appointed representative and other officers of the applicant.
The application for a ‘Representative’s License’ also needs a few additional documents in the form of certified copies of academic transcripts, curriculum vitae (CV) showing at least three years of professional experience in fund management, securities, and investment, independent references from two persons with contact information of the persons to confirm their reference and professional experience and a document showing proof of residence of the applicant. Much like the requirement for a ‘Principal’s license’ a declaration which states that the applicant is unaware of any information which may cause the Commissioner to doubt the competence, integrity, or financial resources of the Representative and/ or the Principal or their ability to undertake business as per provisions of the DSCA is required.
B. Changes affecting existing license holders and renewal applications
The changes in the legislation affect existing license holders as well. The documents required for application for a new license as mentioned above will have to be submitted by existing license holders as well to the VFSC within 16 December 2017 (six months of the promulgation of the amended DSCA- Section 29 of Amendment Act). The bond amount of VUV 5 million (approx $50,000) however has to be paid only when the license comes up for renewal.
The first among the changes which exclusively affect existing license holders is the new requirement to submit a detailed report outlining the activities which were carried out in the license period including
- The number of investors and funds invested by them
- Product in which where the funds were invested and the jurisdiction where investments were made
- Information on withdrawal of funds and reasons for withdrawal
- Report on complaints from investors and response to the complaints
- A financial report showing total turnover by the applicant during the license period
In addition to these documents, a financial statement prepared by an independent auditor in accordance with International Accounting Standard must be submitted within three months of completion of an anniversary date.
The second major change affecting existing license holders is that they are required to apply at least one month before the anniversary date for the renewal of a license. Section 4B of the new DSCA provides that licenses will now be valid for one year which means that an application for renewal has to be made one month before the completion of a one-year period (anniversary date). During the transition period, it is expected that the VFSC will allow for the renewal of licenses that are scheduled for renewal before one month purely as a temporary measure.
C. Changes affecting all license holders and new applicants
There are a few major changes that will affect new applicants as well as existing license holders. The first among them is the prohibition on the sale or transfer of a license. Also, if the shares of a company holding a license are transferred to a new owner, the Principal’s License is canceled automatically and the new owner will have to apply for new licenses.
The second major change is that all Principal Licensees will now be required to submit a quarterly report to the Commissioner stating:
- The number of investors and funds invested by them
- Details of the products offered and jurisdiction where they were offered
- Vetting process followed for investors
- Information on refusals made and the reasons for refusal
- Information on registered agents, officers, shareholders, and beneficial owners
- Report on any complaints received from investors.
We at Empire Global Partners are continually following the developments arising in Vanuatu and will provide you immediate updates on any changes arising in the future. We have modified our processes to comply with the changes in regulations and our team of experts is ready to help you implement the required changes in your business and also establish new businesses in Vanuatu which remains one of the most attractive jurisdictions to obtain your Forex license. You can reach the experts at Empire through phone at +60350331665, by our website www.empireglobal.partners and or by email at firstname.lastname@example.org. We offer clear written contract agreements mentioning the applicable charges including the refund policy, in the unlikely event that the application is unsuccessful