Offshore chaos: Massive percentage of Vanuatu’s population runs away permanently. Want stability? Do NOT register there
Vanuatu, like most offshore regions where some unregulated FX firms choose to register their business, is now witnessing the permanent emigration of the vast majority of its population, representing the entire populace of Ambae. We look at the grave consequences of registering and operating from what is probably the world’s most unstable jurisdiction – you effectively face losing your entire brokerage and its funds.
It has been a very strong opinion of FinanceFeeds for quite some time that establishing a brokerage in a distant, unrecognized and non-regulated jurisdiction which is synonymous with tax dodging and circumventing of the rule of law is the antitheses of how to run a proper electronic brokerage.
Not only would it be extremely difficult to encourage a client base with any trading acumen or longevity to deposit even one dollar to such an entity, thus making life an exhausting and increasingly impossible round of continually attempting to garner the interests of $200 customers from extremely undeveloped regions of the world, but companies engaging in such corporate structures face another type of instability – that being the innate nature of the offshore regions themselves.
Since 2015, the Pacific Island of Vanuatu has become a region of interest for small brokerages that do not wish to be present in major regulated regions, and for those wishing to eschew regulation in Europe or North America in favor of what appears to be a route that requires considerably less work, less capital, less regulatory reporting (actually, none at all!) and perhaps the most alarming of all, lazy business ethic and no recourse for clients if something goes awry.
Today, however, a further reason to avoid such backwaters from a client and brokerage perspective has occurred, that being the evacuation and permanent resettlement of approximately 11,000 residents of Ambae.
This is a grave situation, and actually represents the entire depopulation of Ambae, turning it into a barren rock with zero inhabitants whatsoever.
The permanent resettlement is as a result of a volcanic eruption, and has been done as an immediate, kneejerk reaction.
What would happen if, all of a sudden, Cyprus decided to completely resettle its entire population with no preparation and no warning? What about client bank accounts, company registrations, the government sector employees that administer corporate reports and accounting if everyone suddenly disappeared?
That would of course never happen, because Cyprus, whatever anyone may think of its clannish corruption and monopolistic favoritism, is a member state of the European Union, a former British colony with English Common Law as its backbone, and is established and sustainable.
Vanuatu, on the other hand, is a rogue island in the South Pacific with zero industry and zero notoriety except for the ability to register pariah companies there which can in turn do whatever they like to their customers, as the owners of the companies neither live there nor onboard clients from there. Doing business with a company that is registered in Vanuatu, from a retail trader’s perspective, is like doing business with a company that is registered on the moon.
Ambae Island is home to 11,000 people, and for the second time in six months Ambae’s Manaro volcano on top of Mount Lombenben has started rumbling, spewing torrents of ash and gas from its crater and burying vegetable plots and crops, causing breathing and health problems for locals, and threatening their lives and livelihoods.
People living in the north, west and south of the island are worst affected by the ash and began being evacuated on Thursday after a state of emergency was declared on Tuesday.
Ash as deep as 30cm had already settled on many parts of the island, and people were experiencing breathing difficulties, skin reactions and illnesses such as chest infections as they waited to leave.
One Ambae resident, Nadia Kanegai, said islanders were frightened and could not wait to get away.
“The ashfall, like part of west Aambae was covered and it was dark [because] of the smoke and the population there was remaining inside and could not come outside,” she told RNZ Pacific.
Should a natural incident or disaster occur in North America or Europe, which from time to time, of course, it does, no such flight takes place. Instead, dedicated and well organized departments deal with it effectively whilst everyone else gets on with their work.
In Florida last year, the hurricane tore through, doing some considerable damage. Did the proprietary trading shops of Boca Raton up sticks and run away, leaving their clients high and dry? No they did not, and hurricanes are a regular concern in the Sunshine State.
Negotiations are under way between landowners and central government to acquire land for Ambae evacuees on either Maewo or Pentecost – the two closest islands to Ambae, but a safe distance from the volcano, which is one of the most active in the world. These would fall outside the jurisdiction of Vanuatu and for those wishing to get their hands on their funds, or have some seamless transfer of commercial entities – good luck!
“People’s lives must be our first priority,” said prime minister Charlot Salwai during the October evacuation, in which planes, ships and barges were used in the DIY effort of quickly depopulating the island.
Vanuatu is no stranger to natural disasters, and the the south Pacific nation was rated the most at-risk country in the world in a 2016 UN study.
Onboarding clients offshore has become regarded as a very dubious activity, and FinanceFeeds has recently uncovered some unsavory practices employed by certain firms when doing so, which are going un-noticed by the global regulators, even when conducted by companies with a CySec license which onboard clients offshore and give them banal trading terms.
Quite simply, those who are serious about the brokerage business will not succumb to a lazy lifestyle of irresponsibility with an offshore registration and a digital marketing/lead buying strategy, but will build and sustain their firms correctly.
It is also no good considering that if Vanuatu sinks, and its populace literally runs away, the bank account in Lithuania or Georgia will release money. Even third tier banks in regions such as that with very loose ethics would be notified that the company’s registered jurisdiction had suddenly become completely depopulated and likely freeze the account.
Setting up another company elsewhere and then attempting a withdrawal would be futile because bank accounts cannot be transferred from one entity to another in most cases, and if all signatories, lawyers and those able to provide a power of attorney have all literally jumped ship, a wing and a prayer is pretty much all that is left.
For those still tempted, consider the consequences of one day asking for a withdrawal of money from a bank – no matter what region of the world that is in – or trying to operate your business when one day there are people in an office, and the next day there is an empty rock.
Yes indeed, Vanuatu itself is home to 260,000 people, but the ability to immediately depopulate specific parts of the country should be enough of an alarm bell, and demonstrates that there is nothing of substance whatsoever in vast parts of it that would stop an entire population simply piling onto boats and disappearing.
Mind how you go….