FMA Vanuatu Eyes Brighter Future for the Nation’s Financial Industry
Last week saw the launch of the Financial Markets Association (FMA) of Vanuatu, the result of the financial industry’s yearlong effort to restore its reputation and attract more high-quality international companies into its jurisdiction.
Three years ago Vanuatu featured on the Financial Action Task Force’s (FATF) list of eight countries with “strategic deficiencies” regarding anti-money laundering and countering the financing of terrorism (AML&CTF) alongside countries like Syria and Yemen.
This made it hard for the financial industry to conduct transactions with international companies and compete on the world stage.
At the time there were hundreds of financial dealers under licences from the Vanuatu Financial Services Commission (VFSC), typically operating digital platforms for trading financial instruments and securities online. International regulators deemed the VSFC’s supervision too lax by global standards.
Meanwhile, media reports surfaced of financial dealers defrauding their customers in other jurisdictions.
A brighter future
“Vanuatu’s reputation was in tatters,” says Roy MacDonald, owner of Corporate Services Limited, one of the six VFSC-registered agents who co-founded FMA Vanuatu. “We collectively dropped the ball in terms of assessing and monitoring the international companies operating in our jurisdiction.”
After a complete overhaul of the industry’s regulatory regimen, the FATF removed Vanuatu from the AML&CTF list in June 2018 following an on-site review.
Among changes brought up by Vanuatu legislators were the Financial Dealers Licensing Act N°31 of 2018, which requires comprehensive pre-licensing checks, a 5 million Vatu bond deposit, professional indemnity insurance, reporting and auditing obligations, reinforced AML&CTF controls, and ongoing monitoring by the authorities.
Since delisting from the FATF, the number of licensees decreased – it stands at about 110 today – but the quality of those licensees went up.
According to FMA founders, in addition to compensating for tourism revenue lost due to the pandemic, a robust financial industry may spur growth for Vanuatu in the future.
Strengthening the industry
“The online financial industry is growing by the day, and the better we compel these companies to set up shop in our jurisdiction, the closer the nation gets to achieving self-reliance and prosperity,” reasons Macdonald, believing that this can both boost Vanuatu’s GDP and generate a new source of employment for the country’s youth. “But to do that, we need to foster a well-regulated, fair, and efficient market environment.”
The new association, located on the Yumiwork premises in Port Vila, is determined to make sure that happens. Existing legislation already puts Vanuatu on par with global regulatory standards, making it just as stringent as other countries for online dealers to obtain a license.
But FMA Vanuatu wants to go one step further to drive industry advancement by promoting effective regulation, peer-to-peer accountability, and transparent governance for financial dealers.
The founding members also announced that they are discussing legislative amendments to enshrine world-class best practices into Vanuatu law.
Additionally, they will establish a disciplinary committee of members and government regulators that will act as the industry’s self-regulatory body to mediate complaints and implement sanctions where necessary.
FMA Vanuatu will give its members a unified voice and open communication channels with governments and regulators, media organizations, and the general public, both in Vanuatu and abroad.
This includes marketing initiatives to communicate the benefits to online dealers of domiciliating in Vanuatu.
“More high-quality players in the jurisdiction means a better awareness and reputation for all of us,” says Marine Dondelinger-Mathis, compliance director for TitanFX, a foreign exchange and commodities trading platform and one of the association’s first members. “We might be competitors, but if we help each other as an industry, in the end we’ll bring more value to retail investors. In that sense, FMA Vanuatu may very well be the steppingstone that propels all of us to the next level.”
More details on the Financial Markets Association of Vanuatu can be found on the new website: www.fma.vu.
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