The Vanuatu Foreign Investment Promotion Agency (VFIPA) has announced the cancellation of 23 Financial Dealer License (FDL) companies in Vanuatu. This action is due to significant operational challenges, primarily stemming from banking and regulatory issues.

FDL companies have faced considerable challenges in opening and maintaining bank accounts due to the compliance policies imposed by individual banks. This difficulty is exacerbated by global banks' cautious approach toward jurisdictions with perceived lenient regulations, resulting in operational obstacles for financial dealers. Investors have faced delays in obtaining timely visa and work permit approvals, which has hindered their ability to bring in necessary expertise and commence operations smoothly. Additionally, there is a notable difficulty in hiring qualified and experienced staff locally, which impacts the operational efficiency of FDL companies. Finding suitable office space has been another significant hurdle for FDL companies, adding to the logistical challenges they face in establishing a physical presence. The lack of correspondent banking facilities has further complicated the financial transactions and stability of FDL companies in Vanuatu. There is also a shortage of training opportunities for Ni Vanuatu staff, which affects the capacity building and skill development necessary for sustainable business operations.

Since October 2022, FDL companies are required to establish a physical presence in Vanuatu, including having management reside locally and employing local staff. This shift has increased operational costs and logistical complexities for companies. The transition to onshore licensing has introduced stricter compliance requirements and local regulations. Companies that fail to adhere to these heightened standards face the risk of having their licenses revoked, potentially causing significant disruptions to their operations.

Moving forward, VFIPA is committed to creating a business-friendly environment by actively collaborating with the Vanuatu Financial Services Commission (VFSC) and other key stakeholders. We will engage in comprehensive dialogue with regulatory bodies and financial institutions to ensure that our solutions balance regulatory compliance with operational feasibility. Advocating for a review of policies to create a more supportive environment for financial dealers, including other quality investors, while maintaining regulatory integrity demonstrates our understanding of how FDIs are evolving and reshaping as a result of prevailing domestic and global challenges and how we are responding to these changes. Our continued commitment to these efforts will ensure that Vanuatu remains an attractive destination for foreign investment, as we resolutely support investors through these challenges.

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