There are some regulators, such as St.Vincent and the Grenadines, that provide significant perks to brokers.

St. Vincent and the Grenadines

What it is and what it does

Investments should not only be profitable, but traders need to feel safe. This means ensuring a broker is regulated and reliable before signing any contracts or sending any funds. However, checking that a broker has a license on its website is not enough. The regulatory entity that licenses the broker should also be reliable. 

There are some regulators, such as St.Vincent and the Grenadines, that provide significant perks to brokers. They may not require taxes or residency. It may be quick and easy to obtain a license. However, these advantages are enjoyed mainly by the financial institution but may represent a liability to clients. The lack of oversight these brokers have may put clients at risk.

What Is St. Vincent and the Grenadines or SVG FSA?

The SVG FSA is located in St. Vincent and the Grenadines, which is an island nation and a sovereign political entity in the Windward Islands archipelago, which contains 32 islands. St. Vincent and the Grenadines is an island neighbor to Barbados, Trinidad, and Tobago as well as Grenada and Venezuela. 

You may have heard of St. Vincent and the Grenadines in connection with financial institutions through the many advertisements that appear on the internet promising quick, easy and cheap licensing from this island. Surprisingly, there are so many services offering to assist would-be brokers when compared to other brokerage licenses, it is extremely easy to obtain a license from SVG SA even without third-party assistance. 

These advertisements tout the many advantages of getting a brokerage license from St. Vincent and the Grenadines or SVG FSA, including:

  • Tax exemptions, including local,  income, and corporate or withholding taxes
  • No minimum capital requirements
  • Light residency requirements that are easy to circumvent
  • No need to reveal a list of owners on public documents
  • No requirement to submit an annual report
  • Financial confidentiality

These perks sound like a dream come true to brokers, particularly to unscrupulous ones who are looking for ways to avoid taxes, not have to submit forms to regulators, and avoid transparency. In short, these advantages for would-be brokers represent disadvantages to their customers, who lack protection.

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Why Lax Licensing of St. Vincent and the Grenadines Brokers is Risky for Customers

Although the list of benefits provided by this regulatory entity is long for brokers, there is one major drawback, which can outweigh all of the advantages. A brokerage license from St. Vincent and the Grenadines looks dicey.

The individual broker may not engage in illegal activities, but given the loopholes and opportunities for concealment provided by the regulator, it is understandable to be suspicious of brokers who have a license from SVG FSA. Since a reputation for trustworthiness is essential for a broker’s success, legitimate brokers tend to avoid the SVG FSA. 

There are many reasons why the lax requirements for brokers laid down by St. Vincent and the Grenadines are not good for customers. The lenient residency requirements mean that the broker can be located anywhere. This ability of movement means that the brokerage doesn’t need to be connected with a specific location and provides mobility to those who try to get away with illegal activities. 

The generous tax breaks aren’t directly harmful to clients, except that they can cause the customer to question the motives of the broker. It is reasonable to suspect that the broker is involved in his or her profession not because they have a passion for trading and knowledge and experience to share, but to make a fast buck and to save a bundle on taxes. 

This doesn’t fit the description of brokers who are committed to creating value for their clients. 

Also, the license does not require an examination or any disclosure of who is involved in the brokerage. Its brief waiting time and low fee should be a red flag. 

The lack of transparency required by St. Vincent and the Grenadines regulators is astonishing. Not only do brokers not need to reveal who is involved in the organization, but they do not need to file annual reports and there is no inspection by regulators.

Brokers registered by the authorities of St. Vincent and the Grenadines are given very little protection since virtually anyone can get a brokerage license. An example of how inattentive the regulator is on clamping down on unauthorized activity is the plethora of brokers who claim to have a license from SVG FSA offering Forex and binary options trading. 

What is the problem with this? The problem is that St. Vincent of the Grenadines does not provide a license allowing forex trading or binary options. It merely releases a statement washing its hands of any responsibility for forex trading and binary options done by brokers claiming be its licensees. 

The SVG FSA released a statement, “The FSA does not issue any licenses to carry on the business of Forex trading or binary options nor does the FSA regulate, monitor, supervise or license International business companies (IBCs) that engage in such activities.” 

All this statement does is release SVG FSA from any direct responsibility for its licensees providing forex and binary options, and yet it has done little to crack down on this practice or discipline licensed SVG FSA brokers from trading these assets. This means very little protection for the customer because the regulatory body can deny any responsibility if things go wrong. 

There have been many complaints against brokers licensed by St. Vincent and the Grenadines, including refusing to allow clients to withdraw their money, making unauthorized transactions, and charging extra “fees.” There have also been complaints that the SVG FSA is slow to respond to customer complaints and that there is little enforcement of the light regulations the SVG FSAhase set down. 

In short, avoid brokers licensed by St. Vincent in the Grenadines

Have You Been Scammed by Brokers with Licenses from St. Vincent in the Grenadines?

If you want to know if a broker with a license from the SVG FSA is legitimate or if you have fallen victim to a scam broker licensed by St. Vincent and the Grenadines, Trade Defense Advisory professionals can confound the scammers and retrieve your money. 

Consult with Trader Defense Advisory experts and provide details about your experience with a fraudulent broker. We have the tools and the methods to locate the unscrupulous brokers and get your money back.