Media Blog
Advice For Money Broker Wannabes
The job description for a money changer or money broker is pretty straightforward. Simply, this calling earns its keep by converting one type of currency to another for a fee. The main clients of money changers are the international travelers who will need to change cash from their home currency to the currency of their destination. Conversely, travelers returning from abroad will need the services of a money broker to change back to their home currency any foreign currency left from their trip. Money changing services are now provided either online or in person.
A corporation or an individual can operate this type of business by obtaining an offshore money broker license. Income is primarily generated from the fee charged for handling the currency, calculating the foreign currency exchange rates, charging the fee, and delivering the client’s needed currency. A business can also derive profit from the fluctuations in forex rates in the international markets.
Engaging in the money-changing business can be a lucrative undertaking. International travel, hassles on airport security checks notwithstanding, remains as active as ever. Additionally, the increasing globalization of business saw more and more ventures overseas. Movement of assets from one country to another and transfer of currencies to tax havens are also contributors to the demand for money brokers. Foreign currency exchange rates can also fluctuate widely, leaving a generous room for profitability.
A minimum of about $27,000 investment, plus an annual operating budget of around $12,500, will be needed to set up an offshore money-changing business. A group of shareholders can be involved in funding the establishment of this business, an operation that will subsequently entail having a set of company officers and electing a board of directors.
As in setting up any company, organizing a foreign currency exchange business will require more than routine paperwork to wade through. Applying for the license for the forex operations can be a complicated task that would require the need for a service provider which already has an inside track on foreign currency trading. For starters, the various international jurisdictions where a foreign currency exchange business operates can vastly differ in terms of policies. There has to be a thorough study on the taxation and regulations on the business.
Ideally, an offshore money broker should operate in a jurisdiction offering some tax advantages, less paperwork and red tape, lower operating costs and overhead. Additionally, the jurisdiction to go for should have adequate regulations i regarding private assets and forex transactions. Such a jurisdiction should also have a pool of competent professionals to assist in establishing and running the money-changing business. Having all these in place opens the possibility of outsourcing some functions and, in the process, enhancing profitability for a foreign currency exchange business.