Exclusive: Offshore Brokers Booking €2-3m Monthly Deposits from EU

In what is the latest alarming sign for the ESMA, the new regulatory framework continues driving money offshore.

Several offshore brokers operating in remote jurisdictions are booking between €2 and 3 million of deposits per month from the EU. The news comes on the back of the new regulatory framework introduced by the European Securities Markets Authority (ESMA) in August.

Sources with knowledge of the matter have also confirmed to Finance Magnates that several offshore jurisdictions have become very difficult to operate in. Brokers with licenses in Belize, Marshall Islands, and Vanuatu are struggling to find payment providers who can provide them with card processing services.

This doesn’t apply to all brokers regulated in these jurisdictions, but some are facing hardships to access acquirers. Some companies are only accepting bank wire deposits due to card transfers restrictions. The monthly amounts mentioned above are mostly transacted via bank wires.


Jurisdictions such as the Seychelles and Mauritius are viewed as more prominent.

Blacklisted High-Risk Countries

The European Union blacklisted several countries in the aftermath of the Panama papers leaks in 2015. There are two major groups of notable regulatory jurisdictions for brokers.

The first one includes the Marshall Islands and the United Arab Emirates. The second, which are countries in the grey list are Vanuatu, Cook Islands, Bermuda, Cayman Islands, Jersey, and the Isle of Man.

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The difficulties for brokers in getting acquirers to service their card payments needs are not deterring them from taking on business.

Requirements to provide legal opinions that grant them the right to onboard clients from given countries have been sufficient to go around some restrictions.

That said, the alarming rate at which EU clients are heading offshore should be a major red flag for the ESMA.

Regulated Brokers Warnings to the ESMA

Brokers to whom Finance Magnates has spoken shared that they explicitly warned the ESMA about the offshore flight risks. Several executives have shared their concerns during the consultation period but to no avail.

After two temporary restrictions to the provision of binary options each lasting three months, national regulators are taking the lead to ban the product permanently. The course of action started by the German BaFin yesterday could be the right decision when it comes to binaries.

The leverage restrictions that are pushing broker clients offshore are more of a concern. Should those be made permanent, the regulators are risking a permanent renaissance offshore.

Regulated companies in the EU are already feeling the squeeze from the flight offshore. If the ESMA doesn’t listen to feedback from both clients and brokers, clients will end up being much less protected than before the 1st of August.

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