Banking & Payment Challenges for Unlicensed / Unregulated Offshore Forex Brokers

Whether you would like to start your own forex broker, or are currently operating an existing, unregulated brokerage, chances are you’ve already run into banking and payment challenges. Experience has shown that it’s wise to sort out payment and banking options before your broker becomes too large. Why do we make this suggestion?

Acquiring new clients is challenging enough, and can become ever the more frustrating when your broker runs into nightmare scenarios that some of our clients have faced: freezing of payments, bank account closure or discovering a payment provider has outright disappeared.

Why is Obtaining a Bank Account so Difficult for New or Unlicensed Offshore Forex Brokerages?

Back in the early 2000s, the online forex & CFD market was in its early growth stages so banking issues weren’t so difficult for new FX brokers. The reason bank accounts were easier to obtain back then was due to the simple fact that global banks didn’t fully understand the forex trading industry. Additionally, regulations were far less stringent, meaning banks were simply less cautious with new clientele. This situation dramatically changed, especially in the past 3 to 4 years, where banks have become far more cautious about the online forex trading industry as a whole.

The reason why it is now more difficult for offshore FX brokers to obtain bank account is that forex trading happens to fall into a high risk category for banks and payment service providers. Unfortunately, there have been too many brokers, mostly unregulated, that have given the forex industry a bad reputation. As a result, the entire reputation of the online forex trading industry as a whole has suffered. For this reason, it is now very difficult to obtain a banking solution if your broker is registered in an unregulated offshore region like St. Vincent & The Grenadines or another unlicensed jurisdiction.

Exercise Caution with Unregulated Payment Service Providers (PSPs) and Newly Formed Banks

Unregulated, offshore forex brokers registered in St. Vincent are often tempted to seek out creative options when it comes to finding a proper banking solution. We’ve seen and heard of consultants offering bank accounts in parts of Eastern Europe, Balkan countries or relatively unknown islands. From our experience, it is best to avoid these banking solutions since they tend not to work out in the long run; there is a high probability that the account will be closed or worse, funds frozen shortly after receiving approval. Sadly, we’ve heard far too many horror stories about such banks, leaving our consulting team very skeptical.

Similar to our advice concerning bank accounts, it’s important to carefully research and study any payment service provider (PSP) that is operating without any type of license. We strongly urge forex brokers to steer clear from unregulated and unlicensed PSPs. Because fewer and fewer payment options for new, offshore FX brokers exist today, many unlicensed providers have emerged that may appear to offer a viable solution. Unfortunately, we’ve encountered far too many clients who have had their funds either frozen or disappear completely, which is why we strongly urge any broker considering these solution providers to exercise caution.

Forex Consulting – License & Regulation Consultation Services for FX Brokers  

The simple truth is that attempting to obtain a bank account for an unlicensed, offshore forex broker is almost impossible. There are, however, a few options to consider. If banking is essential to the future success of your forex brokerage, then it makes to think about obtaining a forex broker license. Secondly, if you’ve found a banking or payment solution but aren’t certain about its credibility, we are happy to provide our analysis. Finally, we have a unique idea for those willing to think a little bit “outside the box.” Get in touch with us to learn more about it.

Whether you are a looking to start a new forex broker or an existing FX brokerage that is currently in the process of selecting a PSP provider, payment gateway or bank account, we are more than happy to provide our professional assessment.

To receive our opinion about a particular PSP, discuss payment options in more detail or ask a simple question, don’t hesitate to reach out to us today!