Comoros Forex Licences: The Easy Alternative to St Vincent and Vanuatu

Definitely a niche player until now, the Comoros Islands have seen an explosion in interest in forex licences already this month (January 2023) 

In this article we will delve deep into the truth and interesting political history behind today’s Comoros offshore forex licencing. Obtaining a Comoros forex licence is quick, relatively cheap and relatively easy. Such a licence can provide a quick fix to St Vincent forex companies affected by the new regulations or to white-label forex startups looking for a low-cost regulatory solution. But you also need to be aware of  numerous scams revolving around Comoros forex brokerage licences! Read on for further details.

First of all – why would the world of forex brokerage, a giant $750 billion dollar a year industry, suddenly zoom in on this little-known island nation in the Indian Ocean? 

There’s a simple explanation. The reason for the sudden interest in Comoros forex licences (more accurately referred to as international brokerage licences) is the recent Memorandum sent by the Financial Services Authority of St Vincent and the Grenadines dated 6 January 2023. You can read more about this now-infamous Memorandum here. In essence, however, it gives forex companies operating in St Vincent and the Grenadines until March 10th to prove they are regulated in another jurisdiction. Enter Comoros!

A secondary reason is also the beginning of the end of the Vanuatu forex licence. With new substance requirements recently introduced, Vanuatu has become overpriced as a jurisdiction to acquire a forex licence. Vanuatu was particularly popular with Chinese-based forex companies, but they are also now showing an interest in Comoros.

Examining the St Vincent forex decision

St Vincent and Grenadines has become the go-to jurisdiction over the years for forex businesses seeking, shall we say, “light touch”  regulation. Whilst St Vincent forex companies would theoretically be barred from offering forex services in major jurisdictions like the USA, UK and EU, numerous legal opinions and established practice allowed them to operate in an unregulated manner across the internet providing forex brokerage services from St Vincent to the world!

The sudden decision of the regulator in St Vincent now requires all forex companies registered on the island to prove they are regulated elsewhere by March 10th. Experts agree this deadline is likely to be extended as the date nears, since even legitimate forex businesses regulated elsewhere are unlikely to be able to meet this deadline for acquiring the necessary paperwork. Those businesses that are not regulated elsewhere (undoubtedly the majority of St Vincent forex brokerages) might have to cease operations if they cannot meet this deadline, or face heavy penalties.

Comoros Forex Brokerage Licences: The Easy and Cheap Alternative

Where can St Vincent forex brokers go if they are seeking to show they are regulated in another jurisdiction on an emergency basis?  UK’s FCA and Cyprus’  CySEC are going to be out of the price range of most smaller brokerages. Vanuatu has become overly complicated with the substance requirements. Mauritius, Seychelles and Dubai are possible options but there is no way any company can start the regulation process here and be finished anywhere near the deadline.

There is therefore only one alternative. The Comoros offers a quick and easy forex licensing process, light touch regulation, no substance requirements, low costs and as an added benefit, its a non-blacklisted jurisdiction. Comoros is not on the EU or FATF blacklists and has particularly warm relations with the middle eastern states.

Beware of Scams: Why You Need to be very Careful of Comoros Forex Licences

Why have Comoros offshore forex licences not been more popular until now? In fact, Comoros first began offering forex licences more than 25 years ago. Up until now, they have not been very successful. At InternationalWealth we have been following Comoros since the beginning, but we have never heavily promoted this service.

The main problem, as we see it, was the instability of the government in the Comoros. Over the years, there has been a lot of confusion about who actually has the right to offer offshore services from the Comoros! Please indulge us with a little history lesson as it is relevant to the theme of Comoros forex licences.

Up until 1975, the Comoros was a French colony. After independence in 1975, Comoros was marked by years of turmoil, and numerous military coups, many carried out by a now-legendary French mercenary pilot called Bob Denard who was the subject of a movie. 

During much of the time of apartheid in South Africa, Comoros was the only African country that cooperated with South Africa. This period is when Comoros really ended up becoming an accidental player in the offshore business, fighting the worldwide call for sanctions against South Africa. It became the South African apartheid government’s private offshore playground – funnelling cash, arms, planes and everything else the South African government needed.

In 1997, two of the islands, Anjouan and Moheli, declared independence. It was at this time that both, direly in need of cash, decided to position themselves as offshore finance centres, licensing banks, forex brokerages, banks, IBCs, ship registries and many other forms of business.

Today the country is officially known as the Union of the Comoros and, according to its government, it consists of four islands: Grand Comore, Anjouan, Moheli and Mayotte. Not everyone there agrees with them, though.

Mayotte, for a start, is still under French control. Despite the territorial claim of the government of the Comoros over Mayotte, Mayotte is basically part of France. It is therefore not interesting for us offshore practitioners.

Grand Comore is the seat of the Federal Government, but the treaty by which Anjouan and Moheli rejoined the Union allowed them to keep their own independent governments (much like states versus federal government in the USA). This has led over the years to a lot of tension and disputes over who really has the right to run the offshore centres. From time to time, the Federal government will issue a press release claiming that one of the two remaining autonomous islands is acting illegally, and vice versa. 

As far as we know the matter of jurisdiction of offshore matters has never actually been tried in a constitutional court in the Comoros. There is however some curious case law from an International Arbitration Court in London, where a Chinese investor and a Frenchman each claimed they had the right to run an offshore centre on one of the islands, such a right being private property ceded by the island’s government. The Arbitration hearing in London decided in favour of the Chinese citizen.

Of course, the Comorans have really been shooting themselves in the foot with these disputes as they could have joined forces, employed the right staff and run a successful offshore finance centre. Instead, they have sown doubt in the minds of international clients that has hammered their reputation – if the Comorans themselves cannot agree which authorities regulate which business, how can anybody in the wider world be expected to know?

Worse still, the resulting confusion has caused fraudsters, who have no connection whatsoever to the islands, to create their own clone websites of the regulators and start selling fake licences. 

These days, Comoros is mainly known in the offshore business as a haven targeting the market of the Gulf States and the Middle East, probably due to its proximity.  From 2008 to 2018 Comoros also ran a Citizenship by Investment Program, selling thousands of passports to inhabitants of the United Arab Emirates and other gulf states. It is said that there are potentially now more Comorans in the UAE than in Comoros itself (population 850,000) but – as in all aspects of the Comoros – nobody really knows.

Comoros forex brokerage licence: a Good Option for Start-Ups and Smaller Forex Brokerages

With all the confusion, do you really want a Comoros forex brokerage licence? Our opinion is that it would be useful for St Vincent forex companies trying to comply with the March deadline, and also for new start-up forex brokerage businesses. The most common type of forex business licensed in the Comoros would be a simple white-label setup of a major platform.

It’s certainly not equivalent in prestige to a UK or Cypriot forex brokerage licence, and it is very much a third tier licence below Mauritius and Seychelles as well. We would put Comoros and St Vincent in the same third tier, although Comoros does offer forex licences whereas St Vincent does not. But of course, the lack of prestige should be weighed against the fact that it is much cheaper, quicker and hassle-free. If traders at your brokerage are happy to deal with your company online without caring about your regulation, there’s really no benefit to doing business in a more regulated jurisdiction.

What exactly is the process for obtaining a Comoros forex licence? 

A Comoros forex licence is officially known as an International Brokerage licence, also allowing various other activities such as stock brokerage, futures, CFD and other related financial services.

A Comoros forex licence can be issued either to a local IBC, or to a foreign company. Following our example, a St Vincent IBC could either seek a Comoros licence in its own right, or establish a daughter or sister company in Comoros that would apply for the licence. Establishing an IBC in Comoros takes only 24 hours.

In terms of due diligence, Comoros is more complicated than St Vincent. This is to be expected, because St Vincent did not regulate forex businesses at all until now – it simply tolerated unlicensed businesses operating on the island. With Comoros, you receive an officially-issued International Brokerage Licence and you are subject to regulation.

There is lots of outdated and fake information on the internet. We spoke in January 2023 directly with the Regulator of Moheli and they confirmed the following as the latest information. They are familiar with the situation in St VIncent and are already processing applications from St Vincent, so they understand the process and the urgency of the situation.

You will need:

• Personal KYC on all directors and owners (passport copies, proof of address, and professional and bank references)
• Bank reference on the company if already established.
• A business plan
• AML Manual including major compliance policies
• Application form
• Financial guarantee

Regarding the financial guarantee this can be satisfied in 3 ways:

• Cash deposit – a deposit with the Authority. This is the least attractive of the three options.
• Local financial guarantee – this can be issued by an insurance company and there are companies that offer this service based on a percentage of the guarantee amount. The exact percentage must be negotiated but is typically around 10% annually. To obtain an exact offer we must first present the company’s Business Plan to the insurance company.
• International financial guarantee – this must be from a recognized solvent third party in another country, normally a bank.

How much is the financial guarantee actually required? The minimum is EUR 50,000, but the Regulator has the discretion to ask for a larger guarantee once the business plan is presented.

How to Get Started with a Comoros Forex Brokerage Licence Application Today!

In summary, Offshore Pro Group (the parent company of InternationalWealth) can offer our professional services for licensing of a forex company in the Comoros.

Please contact us by email, or alternatively via WhatsApp, and be prepared to give nour consultant the following information:

• Details of your company (if you have an existing one) and its directors and owners (citizenship and residence)
• One paragraph description of the business you want to licence
• Details of whether you have an existing business plan, compliance policies etc or if you need help creating one.

If you have any questions, do not hesitate to contact us.