The Caribbean island of Saint Vincent and the Grenadines (SVG) has long been a popular location for financial institutions due to its low business registration requirements.
This has led to many Forex brokers being registered through the SVG regulator, the Financial Services Authority (SVG FSA).
St. Vincent and the Grenadines Financial Services Authority (FSA) does not regulate forex activity.
This is because there is no such thing as a forex activity in St. Vincent and the Grenadines, and hence, there is no FSA-issued FX Brokerage License.
The FSA, established in 2012 to promote economic growth by regulating non-bank financial entities in the country, only issues corporate registration licenses.
However, registered International Business Companies (IBC) are allowed to engage in forex and other financial activities.
This minimal requirement, with no business plan or background check needed, has become popular among companies, especially start-up brokers.
It is important to note that the FSA license in St. Vincent and the Grenadines does not regulate the forex practices of registered brokers. Unlike other offshore regulators – Mauritius FCS, Seychelles FSA, and more, the FSA does not enforce any regulations on forex trading.
If a broker fails to submit required documents on time, they may be struck off the register according to the FSA Act and the International Business Company (IBC) Act Amendment.
So what’s new in SVG?
In January 2023, the SVG FSA made a major announcement that companies wishing to engage in FX activity need to provide certified copies of the necessary licenses from the jurisdiction where their business will be performed.
This announcement applies to both new and already registered companies, and sanctions will be imposed for failure to comply by March 10, 2023.
The move is a response to increasing fraud complaints on Forex brokers and to protect the reputation of SVG as an international financial hub.
However, some believe the requirements are too stringent, while others question if there is room for shady business practices. A number of B2B-oriented compliance companies have offered assistance to troubled brokers before the deadline.
Offshore regulation in the Forex market is becoming increasingly popular due to stricter regulations in regions like the EU, Australia, the UK, and the US.