Lots of companies have been looking to get a forex broker license in the Comoros over the past couple of years.
This was mainly due to regulatory authorities in St Vincent and the Grenadines putting pressure on brokers to prove they were licenced in every jurisdiction they do business in.
This is a bad idea.
The Comoros forex broker license is fake
Companies getting a forex broker license in the Comoros have been applying to a ‘regulatory body’ called the Mwali International Services Authority.
Mwali is one of the islands that is part of the Comoros, a country made up of several islands which sits off the coast of East Africa.
However, the Mwali International Services Authority is fictitious – it is a fake entity that someone has made up, seemingly with the goal of onboarding forex brokers and gambling companies.
Many companies have fallen for this because they were looking for a cheap, fast place to start a forex broker.
The Mwali International Services Authority is a scam
Part of the reason the Comoros forex broker license scam is so convincing is because it has been going on for a long time and there are several major firms and banks that appear to have set up shop there.
We cannot emphasise this enough – whatever firms have set up under the auspices of the Mwali International Services Authority, their license is fake and they have been scammed or they simply don’t care and just want a license to put on their website.
It should be axiomatic why getting a forex broker license in the Comoros is a bad idea as a result. But to spell it out clearly, the Mwali International Services Authority license is fraudulent and, if you decide to proceed with acquiring one, you will be spending upwards of $65,000 to $70,000 in your first year to get a worthless piece of paper.
This is not to mention the fact that the banks set up in Mwali, under the fake regulator, do not have functioning facilities. You will not be able to receive or transfer from these banks because they are not actually regulated and the details, like SWIFT codes, won’t work.
What are alternatives to the Comoros for forex brokers?
The primary reason forex brokers want to go to the Comoros is because it is cheap and quick to set up there, which shouldn’t be too surprising seeing as you are effectively paying for a PDF that doesn’t take more than five minutes to make.
Fortunately for anyone looking who is looking to start a forex broker affordably and quickly, there are other options.
You can read our article on the cheapest country to start a forex broker for a more thorough deep dive into the topic, but below we’ll look at the three jurisdictions that are likely to be most attractive for any broker that would otherwise have gone to the Comoros.
Start a forex broker in St Lucia
| St Lucia forex broker licence | |
| Positives | Negatives |
| 2 – 3 week set up and low registration fees | Difficult to access banking |
| No tax | No formal regulations |
| Low regulatory burden | Can be negative for your brand |
St Lucia is likely to be the most attractive jurisdiction for anyone looking to set up a forex broker as an alternative to the Comoros.
The reason for this is simple – it is fast to set up a broker there, with company registration often taking less than two weeks. The ongoing costs are also extremely low. Excluding any legal and/or consulting fees, the actual registration of a business and the annual fee of keep it active should not cost you more than a few hundred dollars.
The downsides of operating from St Lucia are that you will struggle to access banking services. There are also no formal regulations of the FX/CFD industry in the country, which means you will be limited to where you can do business or operating in a legal grey area.
Start a forex broker in St Vincent and the Grenadines
| St Vincent and the Grenadines forex broker licence | |
| Positives | Negatives |
| <1 week set up and low registration fees | Difficult to access banking |
| No tax and high level of anonymity | No formal regulations |
| Low regulatory burden | Downside risk potential from regulator |
St Vincent and the Grenadines became one of the most popular places to start a forex broker in the wake of regulations put into play by the European Securities and Markets Authority in 2018.
The benefits for brokers setting up in St Vincent and the Grenadines were clear – it is very fast to register a company there and the costs of doing so, and keeping the business running, are low. You also pay no tax, have no need to establish an office there, and have a level of anonymity.
However, there are serious downsides to St Vincent and the Grenadines that brokers need to be aware of.
One is that you will struggle to access banking services. As with St Lucia, there also no formal regulations governing the FX/CFD industry in the country, meaning you are limited in where you can business, without being subject to regulatory risk.
However, the most important factor here is that authorities in the country sent a note out in early 2023 saying that brokers set up in the country would have to prove they were regulated in all the regions they do business in.
This is obviously close to impossible for almost every broker in the industry today and, although it’s unclear how vigorously this is being enforced, it means anyone starting a forex broker in St Vincent is subject to the risk that they will be looked at by authorities and shut down.
Start a forex broker in Mauritius
| Mauritius forex broker licence | |
| Positives | Negatives |
| Respected offshore jurisdiction | Must have a local office with local employees |
| Better banking facilities | Higher capital requirements (approx. $22,500) |
| Established regulatory regime | Lower levels of anonymity |
Another option for any company looking for an alternative to the Comoros forex broker licence is Mauritius.
Forex brokers in Mauritius are regulated as investment dealers. FX and CFDs are regulated by the Mauritius Financial Services Commission.
Mauritius is a well-respected offshore jurisdiction for financial services, which lends some credence to your brand. It also means there are better banking services on offer for brokers that set up there.
The downsides are that you will need to meet higher capital requirements than St Lucia and St Vincent and the Grenadines. However, at MUR 1,000,000 (approximately $22,450 at the time of writing), this is still extremely low compared to tier-1 jurisdictions.
There is also a requirement to have a local office and local staff in Mauritius, but there are ways that this can be set up to minimise the costs you pay.
Mauritius is not like St Lucia or St Vincent and the Grenadines. It takes a few months to get set up and its pricier. However, this is arguably compensated for by the better branding, regulatory framework, and banking solutions it offers.
