Why brokers hold offshore licences
A broker that wants to serve clients in many parts of the world quickly meets a problem: onshore licences are territorial. An EU authorisation passports across the EEA and no further. A UK permission covers the UK. Neither gives a firm the right to onboard clients in Latin America, Africa, the Middle East or much of Asia, where local rules may be less defined or where no local licence is available to a foreign broker at all.
Offshore licences fill part of that gap. A licence from the Seychelles Financial Services Authority (FSA) or the Mauritius Financial Services Commission (FSC) gives a broker a regulated home for clients outside the major onshore regimes. The licences are generally quicker to obtain than an EU or UK authorisation, carry lighter prudential requirements, and allow product terms, such as lower margin requirements, that onshore retail rules restrict.
That last point cuts both ways. The commercial flexibility that attracts brokers to offshore licences is the same thing that makes banks and payments providers cautious. Understanding how partners think about this helps a group present its offshore entity properly.
The Seychelles FSA licence in general terms
The Seychelles FSA is the non-bank financial services regulator in Seychelles. Brokers there usually operate under what is commonly called a securities dealer licence, issued under the country's securities legislation. The licence permits the holder to deal in securities and derivatives, which covers the CFD and forex model most retail brokers run.
In general terms, an applicant needs a locally incorporated company, a registered office in Seychelles, fit and proper directors and shareholders, a compliance officer, an AML framework that meets local law, and minimum capital. The FSA has, over recent years, increased its expectations of local substance, including staff and management presence on the islands, and it publishes a register of licensees that partners can check.
Specific capital amounts and fee levels change, so applicants should confirm current figures with the FSA and local advisers instead of relying on summaries found online.
The Mauritius FSC licence in general terms
The Mauritius FSC regulates non-bank financial services in Mauritius, including the securities sector. Brokers commonly hold an investment dealer licence, with the precise category depending on the activities involved. Mauritius has a well-developed corporate services industry and a long track record as an international financial centre, particularly for structures investing into Africa and Asia.
The FSC expects a locally incorporated company, a management company or local resident directors as appropriate, a compliance officer and money laundering reporting officer, documented policies, audited accounts and minimum capital. Mauritius has a full AML and counter-terrorist financing framework and has worked through international evaluations in recent years, which partners take into account when assessing the jurisdiction as a whole.
As with Seychelles, the FSC maintains a public register of licensees, and that register is the first place a partner will look.
How payments providers assess offshore regulators
When a bank or payments provider reviews a broker licensed offshore, it is really testing two things. The first is whether the regulator is credible enough that its licence reduces the partner's risk. The second is whether this particular firm is well run, regardless of where it is licensed.
On the first point, partners typically consider:
- Licensing standards: how thoroughly the regulator vets owners, directors and business plans before granting a licence.
- Supervision: whether the regulator requires periodic reporting, inspects firms and publishes enforcement action.
- Client money rules: whether segregation of client funds is required and how it is checked.
- AML framework: the strength of national AML law and the jurisdiction's standing in international assessments.
- Transparency: whether there is a searchable public register that shows licence status, scope and any suspension.
- Cooperation: whether the regulator responds to enquiries and works with overseas counterparts.
Most providers keep an internal rating of regulators. A licence from a regulator that scores well on these points carries more weight than one from a jurisdiction with no real supervision. Seychelles and Mauritius sit in a middle band for many partners: recognised, supervised and transparent, but not treated as equivalent to an EU or UK regulator.
What partners look at in the firm itself
The second point matters more. An offshore licence does not fix a weak business, and a well-run offshore broker can be a perfectly acceptable client. At firm level, partners focus on:
- Substance: real staff, a real office and decision making that happens where the licence says it does.
- Ownership: clear, documented beneficial ownership, with source of wealth that holds up to scrutiny.
- Client geography: which countries the broker accepts clients from and, more importantly, which it excludes. Firms should exclude countries where they have no right to operate, including onshore markets that require local registration.
- Marketing: how clients are acquired, the role of affiliates and introducing brokers, and whether promotional claims are fair.
- Complaints: volume and type of complaints, and whether the firm appears on regulator warning lists anywhere.
- Payment flows: exactly which flows the firm wants the partner to process.
A useful habit is to prepare a short written statement of the client acceptance policy by country. Partners ask for it often, and a clear answer avoids long email chains.
How offshore licences sit inside a group
Offshore entities rarely stand alone. In a typical international group, the offshore broker sits alongside an EU or UK regulated entity, a technology or IP company, a service company employing staff, and a holding company at the top. Each entity has a defined role.
The onshore entity serves clients in its home region under stricter rules. The offshore entity serves clients elsewhere under its own licence. The technology company owns the platform licences and builds the client area. The service company employs dealers, support and back office staff and invoices the regulated entities for their work. Group treasury moves money between them to pay salaries, vendors and liquidity providers.
This model is common and can be entirely legitimate. Problems arise when the lines blur. Examples include clients in the EU being steered to the offshore entity to avoid retail protections, the offshore entity marketing in countries where it has no right to operate, or client funds from one entity being used to pay another entity's costs. Partners look for clear documentation of who serves whom, and for intercompany agreements that explain the money moving between entities.
Documentation a partner will expect
For an offshore broker, the documentation request is often longer than for an onshore firm, because the partner is compensating for a lighter regulatory baseline. Expect to provide:
- The licence certificate and a link to the regulator's register entry.
- Corporate documents, registers of directors and shareholders, and a group chart.
- Identification and address evidence for directors, beneficial owners and signatories.
- Source of wealth evidence for beneficial owners and source of funds for the capital in the entity.
- Audited financial statements and recent management accounts.
- AML policy, client onboarding procedure and country acceptance list.
- Agreements with liquidity providers, platform vendors and payment service providers.
- Intercompany agreements, including service and licensing agreements.
- A description of the specific flows the account will carry, with expected volumes and counterparties.
Firms that keep this pack ready, current and consistent across partners save themselves weeks of back and forth. Inconsistent documents, such as a group chart that differs from the one given to another provider, are a common reason for delay.
Keeping corporate and client flows apart
One way an offshore broker can make itself easier to work with is to separate its corporate flows from its client flows and to approach different providers for each. Client deposits and withdrawals involve card acquiring, local payment methods and high volumes of small transactions to and from members of the public. Corporate flows involve a smaller number of larger payments to known business counterparties: liquidity providers, platform vendors, introducing brokers and group companies.
Many corporate payments providers will consider an offshore broker for corporate flows while declining client money altogether. Presenting the corporate account request cleanly, with named counterparties and supporting contracts, makes that assessment far simpler than an all-in request that leaves the partner guessing what will pass through.
Practical points for offshore brokers
A few habits make a noticeable difference in how an offshore broker is received:
- Check that your own register entry is accurate. If the address or directors listed differ from your documents, fix it before you apply anywhere.
- Keep your website consistent with your licence. The legal entity, licence number and regulator named on the site should match the register exactly.
- Review your country restrictions regularly and make sure onboarding controls enforce them, not just your terms and conditions.
- Be candid about past issues. A regulatory finding, an account closure by another provider or a complaint trend is far better disclosed early than found later.
- Assign one person to own partner relationships, so questions are answered quickly and consistently.
- Keep annual filings, audited accounts and licence renewals up to date. A lapsed filing with the regulator or the company registry is easy to spot and awkward to explain.
General information only
This article gives general information about offshore broker licensing and how payments providers tend to approach it. It is not legal or regulatory advice, and the requirements of each regulator change over time. Always confirm current rules with the relevant regulator and qualified local advisers.
CCYFX handles corporate flows for broker groups and verifies licences directly on regulators' public registers. To see what we look at, read our onboarding guide or our page on offshore businesses.
