SVG regulator orders FX brokers to show their licenses by March 10th

Saint Vincent and the Grenadines (SVG) watchdog, the Financial Services Authority (FSA) recently responded to a growing number of fraud reports by requesting that all forex brokers deliver their licenses. The licenses must be delivered by March 10th of this year. The regulator instructed the companies to bring certified copies of licenses from authorities or jurisdictions in which their business activities are conducted.

The same licenses are also expected from all FX firms that wish to be incorporated or formed in the small Caribbean country. The financial watchdog revealed this request in a recent notice that was sent to trustees and registered agents. According to the notice, the requirement includes all Business Companies (BCs) and Limited Liability Companies (LLCs) that have any ties to FX business.

A sharp rise in fraud claims

The new policy comes as the financial watchdog’s response to a rather significant surge in scam complaints. The number of complaints has been on the rise, and so was their frequency. Allegations against fraud involving forex and forex trading companies, and even international brokers that operated in the country reached concerning levels. So, the regulator decided to confirm which FX operators are licensed, and which ones are the most likely to be fraudulent platforms.

The FSA noted that there are potential detrimental effects that might appear as a consequence of the situation, and affect SVG’s reputation in the world. To minimize the negative impact, the agency said that all must comply with the requirements. Failing to do so will lead to the application of sanctions against the company or companies that failed to comply. This is in compliance with the standing Financial Services Authority Act, and the watchdog has given the FX firms until March 10th to comply.

Meanwhile, the FSA also addressed legitimate registered agents and trustees, asking them to continue to apply AML and CFT practices. This is the only way to make sure that proper due diligence and screening measures are being applied.

Flushing out the fraudulent brokers

St. Vincent and the Grenadines’ FSA has been busy over the last several years, working on bringing its own set of regulations. The number of fraud cases has been working steadily for years now to damage the country’s reputation through illegal business practices.

Now, it seems that the new policy will disrupt this behavior, which is what UK-based fintech consultant, Chris Rowe, said. He added that the big question now is how many forex trading firms will comply. At the same time, the CEO and founder of Gold-i, Tom Higgins, said that SVG is going in the right direction. He believes that no one wants fraudulent brokers, and this is a way to flush them out.

For major brokers with multiple international licenses, this will be merely a paperwork exercise. However, for those with only the local licenses, this will likely lead them to get additional licenses elsewhere. However, the experts did criticize the time frame that the watchdog offered, stating that the deadline is too close to the initial request and that even legitimate, registered brokers will have a hard time obtaining the paperwork in time.