A Gateway to Forex Licensing Vol I: Mauritius Investment Dealer License

Mauritius features a robust economy, driven by a thriving services sector and significant growth potential in financial services.Its stable governance, advanced infrastructure, and favorable tax benefits make it an attractive offshore business destination. This is reflected in the presence of brokers like HFM, XM, and FXTM, all of which are licensed in Mauritius. This article serves as a practical guide to acquiring a Mauritius forex broker license, outlining essential steps and requirements to help brokers secure their licenses.

Mauritius license

Under the Securities Act 2005, various licenses enable entities to engage in forex-related activities. However, securing a Category One Global Business License (GBL1) is imperative—this is a prerequisite for any business looking to engage in cross-border operations and conduct a forex business. Following the GBL1, businesses can obtain specific licenses tailored to their needs, which are outlined below. For comprehensive details of the licensing framework and application of different types of license, please refer to Codified List​.

• Investment Dealer License

Generally fall under the code section SEC-2.1A to SEC-2.3, the Foreign Investment dealer License allows companies to set up forex trading platforms, and provide exchange and trading services.

Types of License Permissions:

1. Full Service (incl. Underwriting):Authorised to trade securities for resale to the public, underwriting, provide investment advice and manage client portfolios.

2. Full Service (excl. Underwriting): Does not authorize underwriting or distributing securities.

3. Broker: Authorised to handle client order executions and offers guidance on transactions.

4. Discount Broker: Authorised to handle client order executions, and offer no guidance.

• Investment Advisor License

Generally fall under the code section SEC-2.4 to SEC-2.5A, the Investment Advisor License allows you to provide investment advice, market analysis, and recommendations on trading strategies.

Types of License Permissions:

1. Unrestricted: Authorised to manage portfolios of securities and give advice on transactions, excluding corporate finance advisory.

2. Restricted: Authorised to give advice advice on transactions, excluding corporate finance advisory.

3. Corporate Finance Advisory: Authorised to provide corporate finance advisory services related to securities transactions.

• Foreign Investment Dealer License

Generally fall under the code section SEC-6.2 to SEC-6.5, the Foreign Investment Dealer License allows companies to establish forex trading platforms and provide exchange and trading services, if they are already licensed in other jurisdictions. Types include full-service, broker, discount broker, and derivatives.

Key Requirements

If you are applying for a Full Investment Dealer License in Mauritius, it is important to consider following requirements:

• Corporate Structure and Directors

1. The applicant must be a Global Business Category 1 (GBC1) company with a minimum of two directors residing in Mauritius.
   

2. Directors must possess relevant experience in financial or investment services, with emphasis on "fit and proper" standards, ensuring their integrity and expertise.

3. A well-balanced board is required, potentially including additional directors to cover diverse areas of experience

• Local Presence

1. The brokerage must establish a registered, fully functional office in Mauritius, employing local staff for core roles, including Anti-Money Laundering (AML) Officer and accountant.

• Capital Requirements
  

1. The applicant must maintain a fully paid minimum stated unimpaired capital, promptly notifying the Commission if it falls below the required level.

2. For Global Business Companies, an undertaking is required to maintain the minimum capital and not commence operations until met. Evidence of the capital being credited to the bank account must be submitted within one month of license issuance.

• Compliance and AML/CTF Obligations

1. Rigorous AML/CTF policies and procedures must be in place, including client due diligence (CDD) systems, to prevent illicit activities.

2. The appointment of both an AML Reporting Officer (MLRO) and an alternate MLRO is required, both of whom should ideally reside in Mauritius.

• Auditing and Reporting

1. Annual and quarterly audits are mandated, with audited financial statements submitted to the FSC for review.

2. Audits must be conducted by a Mauritius-based auditor approved by the Financial Reporting Council (FRC) to ensure compliance with local standards.

• Insurance Coverage

1. The brokerage must secure Professional Indemnity Insurance proportional to its risk and activity volume. An insurance quote should be submitted at the time of application, with the policy in place upon licensing.

• Shareholder and Authorized Representative Requirements

1. The applicant must have at least two shareholders, with corporate shareholders permitted. Disclosure of share distribution and ownership details is mandatory.

2. An authorized representative with a relevant degree and at least four years of industry experience must be employed to oversee specific regulatory duties.

• Record Keeping and Client Money Protection

1. Financial records must be kept diligently and made available for regulatory review upon request.

2. Licensees are also required to maintain segregated client accounts to protect client funds from being used for operational purposes, ensuring investor safety.

For a licensed Investment dealer must consistently adhere to the following obligations:

1. Maintain all conditions set in the license approval letter.

2. File audited financial statements and tax returns within six months of the balance sheet date.

3. Operate a full-time office in Mauritius with accessible officers during official working hours.

4. Maintain two resident directors in Mauritius at all times.

Application of License

The application for a Mauritius Investment Dealer License typically takes 4 to 8 months, including:

• Initial Documentation(1-2 weeks)

1. Conduct due diligence and KYC checks.

2. Verify the proposed company name with the Registrar of Companies.

3. Collect preliminary documents, including passport copies and proof of residence for shareholders and directors, a brief business model, and a company structure chart.

• Application Preparation(2-4 weeks)

1. Company registration.

2. Prepare the license application pack and corporate documents.

3. Incorporate the company and establish the team, appointing local directors, an MLRO, and a DMLRO.

4. Draft AML/KYC policies.

• Submission(1-2 weeks)

1. File the complete application with the Financial Services Commission (FSC) along with necessary fees.

2. Liaise with the FSC to address any queries until the application outcome is received.

• Regulatory Review (6-12 weeks)

1. The FSC conducts a thorough review, including document verification, background checks on key personnel, and possible interviews or additional information requests.

• Approval and Licensing (1-2 weeks)

1. Upon approval, receive the license and confirm any final fees or conditions.

Conclusion

Obtaining a Mauritius Investment Dealer License requires careful planning and adherence to regulatory standards. As a growing financial hub, Mauritius offers significant opportunities for forex brokers. Understanding the key requirements, particularly regarding capital adequacy and compliance, is vital for a smooth application process.