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Vanuatu Financial Dealers Licensing

calendar 2/9/2022 8:00:00 AM
author Admin System

From the time of its foundation as a country in the 1980s, Vanuatu has developed itself as a country with a parliamentary democracy and a society based on the rule of law. 

In addition to that, Vanuatu has become part of the fight against financial crimes in the world, such as money laundering, tax evasion and terrorist financing by being a member of the main international bodies specialised in this area. 

However, Vanuatu's main pillar has always been freedom, and throughout its history, its governments have strived to find the perfect balance between security, transparency and respect for private property. 

Normally, this country is known for being one of the epicenters of offshore companies, as throughout its history they have had fairly flexible legislation with this type of business, but with the latest reforms, Vanuatu's approach may be changing in the coming years concerning the locality of the companies that can operate within this jurisdiction. 

The main idea behind the new changes to this legislation is that offshore companies will become "onshore" companies, meaning that the offices and headquarters of all companies that want to benefit from Vanuatu's laws will be located within the country, thus creating jobs and boosting the country's economy. 

That said, let us specifically address the changes in this legislation.

The Financial Dealers License

Since October this year, there are now 4 different classes of FDL (Financial Dealers License), which are no longer for one year but are permanent. These classes are tailored according to the type of business an investor wants to open in this legislation.

- Class A: Applicants can apply individually and distinctly for that license, this license covers FX deliverables and Debt instruments. The principal’s and representative’s licenses have cost around 1500 USD, as for Cumulative 1st-year fees cost around 3000 USD. the annual fees cumulative (excludes one-off application fee) is 2000 USD. 

- Class B: Applicants can apply individually and distinctly for that license, this license covers the capital of a corporation (shares), precious metals and commodities. The principal’s and representative’s licenses have cost around 1500 USD, as for Cumulative 1st-year fees cost around 3000 USD. the annual fees cumulative (excludes one-off application fee) is 2000 USD. 

- Class C: Applicants can apply individually and distinctly for that license, this license covers future contracts and derivative products. The principal’s and representative’s licenses have cost around 1500 USD, as for Cumulative 1st-year fees cost around 3000 USD. The annual fees cumulative (excludes one-off application fee) is 2000 USD. 

- Class D: Applicants must apply for classes A, B and C to apply for this license, this license covers dealing in digital assets. The principal’s and representative’s licenses have cost around 1500 USD, as for Cumulative 1st-year fees cost around 12000 USD. The annual fees cumulative (excludes one-off application fee) is 8000 USD. 

Each class has a bond deposit of almost USD 45,000, including class D. We can note that a firm is eligible for all the licenses offered by this legislation, except for class D which requires each of the above licenses to be eligible. 

The only class that requires a minimum capital requirement is Class D, which requires a minimum of USD 500,000. It also requires the physical presence of the company in the country. 

It is worth mentioning that the bond deposit is made only once per firm and not per license, i.e. a company that wants to opt for multiple licenses only pays the bond deposit once. 

Deposits for each license are made to the VFSC (Vanuatu Financial Service Commission), this deposit must be accompanied by a letter of reference from the bank where the deposit is made from, as confirmation of the source of the funds, and if the client/applicant cannot show proof of funds, the application will be refused. 

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Physical Presence 

The idea of all these reforms regarding the physical presence of companies in Vanuatu is that each licensee will have its equipment, documents, staff, software and headquarters being managed within Vanuatu because as mentioned earlier, the government seeks to attract companies that will grow the source of employment and growth in the country. 

Therefore, as a requirement, there must be at least one person who is a representative of the licensee or the firm, who is in charge of all executive actions of the company based in the country. 

In this sense, Vanuatu still appears to be a somewhat liberal country, as it does not require a large number of people to manage the company in its physical presence. However, they hope that with these measures it will be feasible for large companies to invest within the country and that they will require a large number of employees and staff to better manage the business. The bigger the company, the fewer people unemployed. 

The new regulation requires companies to be managed in Vanuatu through offices and physical locations with the following system requirements: 

- Must have a filing system 

- Must have a management and accounting system 

- Must have a continuity plan for the long term following the mandate of the VFSC

Licensed resident manager

However, a firm may have no company directors within Vanuatu and empower a specialized agent of its choice to carry out the company's operations on a daily basis. 

It may happen that for valid reasons, one or more members of the company's staff may not be in a position to travel to the country to establish headquarters and manage the company. In this case, the valid reasons for this must be demonstrated, and then the agent appointed to carry out the operations must demonstrate to be vested with the necessary power by an executive director of the company to do so. 

This power is temporary until a member of the company's executive staff can establish themselves within the country after the reasons given for their delay or failure to do so have been overcome. 

Vanuatu is a young and developing nation, so it is normal for it to grant these facilities to investors so that they can establish themselves in the best way and create a wide network of important companies within the country, thus being very favorable for all parties. 

AML policies requirements

Money laundering in Vanuatu is an issue they do not take lightly, and in order to combat this type of financial crime, they have several agencies within the country that monitor accounts and individuals. 

The Registration Form, Compliance Report Form, Fit and Proper Form, and Immediate Family Disclosure Form are some of the organisms under the mandate of Vanuatu Financial Intelligence Unit whose main task is to assess all activities from key persons of each company. 

Vanuatu's AML (Anti-Money Laundering) and CTF (Counter-Terrorism Financing) manuals indicate that a company should have a list of documents covering all staff, with a risk assessment report. These investigations should be done by a person who has no connection with the company. 

If all goes well, and the key people in the company prove to be free of AML-related crimes, everything can go ahead as planned without any hitches. 

From the beginning of its republican history, Vanuatu's vision has been that of a liberal country concerning the financial world and private property, with its offshore company legislation standing out. 

However, as a developing country, they need to implement new measures to attract large companies to the country and to bring major changes to their citizens, whether by creating jobs, training in new skills or injecting foreign capital into the country. 

This does not mean that they are going to neglect fundamental aspects in the legal framework of the fight against money laundering, tax evasion or any other financial crime, so they have quite rigorous legislation on this issue, offering respect for private property but always within the framework of the law. 

What we can do for you?

At Mundo, we are ready to provide you with the best advice and training on these financial issues in Vanuatu as well as in any other country in the world. Our panel of experts is fully trained to meet all the requirements and concerns of our clients. 

Do not hesitate to contact us if you are thinking of opening a company in Vanuatu so that we can help you with the whole process involved.

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