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By June 15, 2020June 16th, 2020No Comments

On June 5, 2020, the St. Vincent and the Grenadines Financial Services Authority (SVG FSA) issued the following advisory on their website:

IBCs are incorporated in St. Vincent and the Grenadines by the Financial Services Authority, an autonomous governmental statutory body responsible for the regulation and supervision of the country’s international financial services and non- bank financial services. IBCs are not regulated entities but are duly registered entities which are required to abide with the provisions of its governing legislation, the International Business Companies (Amendment and Consolidation) Act.

IBCs are authorized to engage in any business activity, once legal, without additional approval from the FSA, except where their proposed business amounts to activities which are required to be licensed, such as banking, insurance or mutual fund business. These requirements for registration, as opposed to regulation, are similar to that which exists in numerous other jurisdictions, which offer international financial services.

There appears to be a growing trend worldwide where a number of IBCs are being established for the purpose of carrying out the business of Foreign Exchange (Forex) Trading and Brokerage and other related activities. Forex Trading and Brokerage is the activity of trading in currencies. It involves traders speculating on the future rate of a particular currency and hoping that they get the benefit of increases in currency rates. Forex Trading can be done from anywhere in the world with the only tools being an internet connection and a computer.

Until such time that appropriate legislation is put in place to address Forex activities, there is no legal prohibition against an IBC carrying out that activity or from so stating in its Articles of Incorporation. It is however fully expected that the IBC would obtain the appropriate licence to conduct such business in the jurisdiction where the activity occurs, notwithstanding that its incorporation or registration is in another country.

In recognition of the problem being caused by IBCs which engage in forex and related activities, the FSA has over the years publicly issued advisories and warnings via its website advising the public that any forex business undertaken by St. Vincent and the Grenadines IBCs is unregulated by the FSA and that clients should be aware of this and exercise caution when doing such business.

St. Vincent and the Grenadines continues to be vigilant in ensuring that international standards and best practices govern its international financial services and is committed to promoting safe and sound practices, as far as possible, by entities incorporated in its jurisdiction.