Fraudulent Brokers among 134 Brokers registerd in Vanuatu

A report by Finance Magnates has found that close to 134 firms have registered as financial dealers in Vanuatu since the start of 2018.

The massive increase in registrations shows just how popular the small nation, which until recently had very low set-up costs and almost no regulatory restrictions, has become amongst some segments of the retail trading industry.

Brokers began arriving in the country in 2016. Four financial dealers were registered that year, followed by another 12 in 2017.

Finance Magnates has found that in August of this year alone, five brokers were added to the regulator’s registry. That includes Australian-regulated ACY Capital but also some less than scrupulous firms.

Last week, for instance, a company called Capital Market Solutions was registered in the Pacific nation. This could be connected to another company named Capital Market Solutions which is registered in Bosnia and Herzegovina.

Finance Magnates reports that a company, which appears to be owned by Israeli Victor Gankin, operated call centres for a number of unregulated brokers. Nearly all of those brokers have been accused of defrauding their clients.

In fact, a sizeable proportion of the companies registered on the Vanuatu page appear to have some connection to either Israeli companies or individuals. Confirming this is difficult as Vanuatu does not require company owners to list their names publicly.

Regardless of the nationalities of the company owners, the move to Vanuatu is illustrative of a growing problem in the retail trading market.

With regulatory restrictions put in place in Europe, brokers are heading to more relaxed jurisdictions to do business.

Of course, this means that they are put in the same regulatory basket as some companies that essentially have no interest in providing a good or honest service to their clients.

It also leads to more companies going to places like Vanuatu so that they can compete with the higher leverage that offshore brokers provide to clients.

And with Australia now set to introduce its own set of margin-based regulations, we are probably going to see more brokers starting to hop on the three and a half-hour flight from Sydney to Port Vila.