Forex license in Cayman Islands

This region, as an international economic hub, has one of the most significant GDPs in the world (7th place). This was facilitated by the fact that the authorities offered a favorable tax regime for business, simplifying the procedure of registration and doing business, but at the same time required strict compliance with all international norms on anti-money laundering and protection of investors’ capital.

• Favorable taxation system. This territory has a zero tax rate on profits, dividends, capital gains, and income (individuals). But it is worth considering municipal taxes
• One of the most inexpensive licensing systems in the world
• Transparency of requirements, legislation, and all regulations to be complied with are clearly stated
• Political and economic stability, belonging to the UK, compliance with the laws on property, assets, and capital, promote investment for the long term
• Access to the world’s financial sector and transaction processing systems
• It is an international hub where there is an opportunity to develop new partnerships

On the territory of Georgetown’s capital, there are more than 600 banks and 40 insurance centers. In total, about 100 thousand companies are registered. All this demonstrates the confidence of the global financial sphere.

Forex activities, like the entire financial sector, are regulated by the Cayman Islands Monetary Authority (CIMA), which operates under the Securities and Investment Business Law (2020) and regulations. To obtain authorization, the applicant must comply with several legal provisions.

The main requirements for a forex license in the Cayman Islands are:

• The legal entity must have a starting capital amount of $125,000 or more.
• The legal entity must have 3 managers (maybe non-residents) with proven experience in the financial or similar field.
• Details of managers and co-owners must be entered in an up-to-date register (not a public register)
• Compliance with KYC rules, control over transactions, and taking all measures to avoid illegal capital legalization
• Filing of financial reports in a prescribed manner
• Risk management to ensure the safety of deposits

It is worth noting that there are no parameters in the law regarding the mandatory hiring of residents (including managers, and staff) and selection of shareholders.

Official review of the application by the Cayman Islands Monetary Authority can take up to 3 months. Considering this time factor, it is better to apply as early as possible. As a result, the Regulator must decide on the completeness and validity of the brokerage company’s documents.

Together with the application, several documents are submitted, including paid fees; all information about the qualifications of the management, copies of the Articles of Association, business plan, complete information about the shareholders, as well as how the security of the client’s assets will be ensured.

Upon obtaining a forex license, the organization has access to the international foreign exchange market with over $6.6 trillion in daily turnover. Now the company officially becomes a provider of services and tools (platform) for buying/selling currency pairs. Since 2018, it has been possible to trade even alternative currencies (cryptocurrencies, bitcoin, Ethereum) on Forex.

According to the legislation of the Cayman Islands, only legal entities can engage in investment activities.

The procedure of registration of a forex company takes place in several stages:

1. Determination of the type of company. As a rule, the following types of companies are registered: Exempted limited partnerships, foreign companies, and limited liability companies.
2. Preparation of all documentation about the organization (constituent documents, contracts, data on the founders, beneficiaries).
3. Determine the actual address (it is possible to specify the address of the agent who helps with the registration)
4. Writing a business plan with a clear description of the type of activity for 5 years, corporate policy, and clear measures to counteract financial wrongdoing.
5. Payment of the registration fee (without it, the application will not be considered)
6. Opening a bank account

If not all documents are submitted, errors are made or the fee is not paid, the application will be postponed until all deficiencies are corrected.

The Regulator has 90 days, but the term can be extended for 1-2 months (to correct deficiencies in the documents).

A forex license is issued to market participants to ensure that brokers comply with all legal, and financial requirements aimed at protecting the interests of clients and the safety of their assets.

It is worth noting that all documents must be submitted to CIMA in English only and must be notarized.

A forex license in the Cayman Islands requires:

• An application form filled out by the company
• A detailed business plan, which will describe the company’s activities for the next 3 years, projected business activity
• Copy of passports of all founders, beneficiaries (UBO), and officers with proof of their residential address, bank references, and copies of academic qualifications.

For a legal entity, it is still necessary to provide:

• Certificate of Good Standing – a document that confirms the fact that the company complies with all legal regulations
• Constituent documents, agreements, and certificate of incorporation (all notarized).
• Copy or original Certificate of Incumbency (document confirming the authority of the management and co-owners).
• For managers, beneficiaries, and co-owners, passports, proof of residence, and bank statements.
• Recent financial statements, audit results
• A detailed description of the company’s policy on AML/CFT
• Detailed policy on risk management.
• Documents confirming the contribution of authorized capital by the company
• Proof of local office
• Details of the trading platforms to be used and the technological infrastructure that will enable the operation and execution of trades for clients
• A detailed description of the operational procedures in the forex market
• In some cases, additional approvals from other regulatory bodies may be requested

These factors systematically lead to the successful and legal conduct of business in a given region.

The Cayman Islands Monetary Authority (CIMA) is the main regulatory body in this territory in the Caribbean, which decides on the issue of licenses for financial service providers. Under the control of this government body are banking activities, monetary policy, trust funds, investment, and brokerage activities.

The official currency is the Cayman Islands dollar (KYD), and the official language is English. The legislative base is the English Common Law, supplemented by local legal acts.

CIMA’s activities are based on the Securities and Investment Business Law of 2020. Accordingly, to gain access to the Forex market, brokers in this group of islands should apply to CIMA and undergo several procedures.

The main taxes and fees in the region are:

• Stamp Duty 7.5% (payable on the sale/transfer of a property)
• Forex license fees in the Cayman Islands are a broker-dealer application fee of CI$ 500; a first broker-dealer grant fee of CI$ 8000; broker-dealer license renewal fee of CI$ 8000 (every year).
• Fee for the official registration of the company (depending on the size of the authorized capital, for forex company CI$ 10000).

In case of non-payment of the registration fee for the year, the company will be fined from 33 to 100% of the amount determined to be paid. The fee for registration of a legal entity every year is paid in January.