Why can I be refused a Forex permit?
The Forex market is one of the most stable and profitable global financial markets. Therefore, most investors try to invest their funds in this activity area to increase their capital. But for legal activities, you will need a Forex trading license, which not everyone can obtain.
Forex permit and its capabilities
Only permitted companies have the right to engage in financial activities on the Forex market. A special permit will ensure that you operate within the established local laws in the state where you received your permit.
With licensing, your activity will be considered legal and will result in problems with the law. Licensing will allow your company to enter the international currency trading market and attract many clients and strong partners who prefer to do business only with reliable companies.
A permit will guarantee successful business development and provide legal protection from the competent authorities.
Having a permit provides clients with a guarantee that the broker conducts transparent currency trading, excluding the possibility of financial fraud on his part. Also, permitted brokers are systematically subject to special checks by the competent authorities, which provides an additional guarantee of the reliability of their activities.
Only those brokers who fulfill several state requirements in which they applied for permission to trade currency can complete the permitting process.
In addition, only permitted platforms will attract traders, which means a positive reputation for your business will be formed. It will make trade in many countries possible, thereby expanding your activities.
When can a permit be refused?
If you are planning to engage in currency trading on the Forex, then you should know why you cannot pass licensing.
The package of documents will be incomplete
Each state has a list of documents that must be provided for business registration and subsequent permitting along with the application. Such papers will include the following:
- identity cards;
- diplomas in finance;
- certificates of no criminal record;
- certificate of registration (or copies of paid utility bills).
Licensing will be allowed if the papers are notarized or if their set is complete.
Insufficient capital or lack of documentation of its origin
Since the Forex market requires considerable investment, you will need a certain amount of capital to start (each country has its requirements).
In addition, it is essential to document that your money is of legal origin. Therefore, an insufficient amount to open a company or the dubious origin of the authorized capital will lead to a refusal of permission to trade currency.
Lack of AML and KYC policy
In almost all countries, one of the main requirements is the introduction of anti-money laundering and customer identification into the program of activities.
It is essential to provide for this aspect (develop a program and appoint a responsible officer) because a lot of money circulates on the Forex currency market. Regulatory authorities oblige companies to monitor transactions and identify suspicious actions in financial transactions.
No physical office within the country
Some states have a mandatory requirement – you need to have a real office within the state borders where you are being permitted. Please note that it is only possible to conduct business everywhere with a physical office with your legal address (it is registered when registering a company).
The requirements for management personnel have yet to be met, and employment contracts have yet to be concluded.
Each jurisdiction has its local requirements for company management. For example, 1 or 2 directors must be residents of a given state; the directorate must have practical experience in the financial sector. In addition, it is necessary to provide concluded employment contracts with specialists who must also have relevant experience in this field of activity.
Cyber security is not ensured
Your business must be reliably protected from possible hacks by cybercriminals. It will guarantee the reliability and safety of using your currency trading platform. If such measures are not taken (the appropriate technical check is carried out), then you will not be able to receive a permit.
This issue should be addressed and taken seriously if you plan to enter the international Forex currency market. Countries have firm rules and legislation within which you can legally conduct business. Even a slight deviation from regulations or unfulfilled requirements can lead to denial of licensing.