The sentence appears on hundreds of broker websites in slightly different wording: licensed and authorised to serve clients globally. It is the single most expensive misunderstanding in this industry, because the firms repeating it are usually the ones whose payment accounts get closed a year later, and they never connect the two events.
A licence is a permission granted by one state, under that state's law, to carry on a defined activity. Its geographic reach is decided by the law of the country where the client sits, not by the country that issued the paper. A brokerage authorised in a small island jurisdiction has the right to operate a brokerage in that jurisdiction and to hold itself out as regulated there. Whether it may accept a retail client resident in Germany is a question of German and EU law, and the island regulator has no say in it at all.
What passporting actually is, and where it exists
Passporting is a specific legal mechanism, not a general concept. Inside the European Economic Area, a firm authorised under MiFID II in one member state can notify its home regulator that it intends to provide services in another member state, and the home regulator passes that notification to the host regulator. The firm then operates across the bloc on the strength of one authorisation. The mechanism works because every member state has implemented the same directive, because the regulators share a supervisory framework, and because the home regulator remains answerable for the firm's conduct. Our guide to EU passporting rules walks through the notification process and where it stops.
Nothing comparable connects an offshore register to the EEA. There is no notification to file, no host regulator to receive it, and no mutual recognition treaty in the background. The same is true of the United Kingdom after its departure from the single market, of Australia, of Japan, of Canada and of the United States, each of which decides for itself who may approach its residents. The absence of a passport is not a technicality waiting to be solved by a good lawyer. It is the design.
The myths, one at a time
"We accept clients worldwide, we do not target anyone." Regulators assess solicitation by looking at behaviour, not at disclaimers. A website translated into the local language, prices quoted in the local currency, local payment methods at checkout, advertising bought against local search terms, affiliates paid for local traffic, a support line in local hours: those are the facts a supervisor weighs. A footer saying the service is not directed at residents of that country carries very little weight against them.
"Reverse solicitation covers us." Reverse solicitation is a narrow carve-out for the case where a client, entirely on their own initiative, approaches a foreign firm. European supervisors have repeatedly published statements warning that it cannot be manufactured by adding a tick box to a sign-up form, and that it does not extend to products the firm then markets to that client afterwards. Treating it as a business model rather than an edge case is how firms end up on public warning lists.
"Our offshore licence is recognised because the regulator is an IOSCO member." Membership of an international standard-setting body signals participation in information sharing and policy work. It is not a licence recognition agreement and it grants no market access.
"We will use a group structure so the EU entity introduces business to the offshore entity." This is the arrangement supervisors look at hardest, because it is the one most often used to place retail clients outside the protections that applied when they were solicited. Where it is lawful it is lawful only on precise terms, and those terms differ by country. This is exactly the point at which a firm needs its own regulatory counsel in each market, not a template.
None of this is legal advice. Territorial scope is decided by the law of each country where your clients live, and the answer changes with the product, the client category and the marketing channel. Take advice from counsel qualified in those markets before you rely on any structure.
Why the myth survives: nobody stops you on day one
Offshore registration is fast and the platform goes live quickly, so nothing pushes back at the start. The pushback arrives later and from a different direction. A card acquirer reviews the traffic mix and sees European cardholders funding an entity licensed in a jurisdiction that cannot serve them, which turns a merchant file into a regulatory exposure the acquirer has to price or decline. A bank's periodic review asks which authorisation covers the clients in the settlement data. A national supervisor publishes a warning notice, and that notice is indexed forever and read by every counterparty who searches the brand. The commercial consequence usually arrives as a payments failure, which is why so many operators diagnose it as a payments problem. It is a licensing problem presenting as a payments problem, and the article on high-risk merchant accounts covers how that shows up at the acquirer.
What honest scope language looks like
Firms that get this right are specific and slightly boring. They name the licensing entity and its register number, they publish which entity contracts with which client, and they state the countries they do not accept rather than gesturing at a global reach. They geo-block at sign-up instead of relying on a disclaimer, and they keep the block enforced at deposit as well, because a client who reached funding from a restricted country is evidence that the block does not work. Readers can verify any of this themselves through the public registers the regulators maintain.
The uncomfortable version of the advice: if your target market is EU or UK retail, an offshore licence does not get you there, and the cost of pretending otherwise is paid by your payments stack and eventually by your clients. If your market is genuinely elsewhere, say where, and build the licensing to match. Compare what the offshore route does and does not give you in our overview of offshore broker licences.
"If your marketing is in German, your prices are in euros and your checkout offers a German bank transfer, no disclaimer in the footer is going to convince anyone you were not targeting Germany."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- Passporting exists inside the EEA under MiFID II. No offshore register has an equivalent route into the EU or the UK.
- Regulators judge solicitation by conduct: language, currency, payment methods, ad spend and affiliates, not by disclaimers.
- Reverse solicitation is a narrow exception, and supervisors have warned it cannot be manufactured with a tick box.
- The consequence usually arrives as banking and card acceptance problems, which is a licensing issue wearing a payments costume.
Frequently Asked Questions
Does an offshore licence let me accept EU clients?
No mechanism in EU law recognises an offshore authorisation for cross-border retail services, so accepting EU retail clients on that basis is a matter for the law of each member state involved. Firms must take their own legal advice in every market they intend to serve.
Is reverse solicitation a workable strategy?
It is an exception for genuinely client-initiated contact, not a business model. European supervisors have published warnings that it cannot be created through consent boxes or disclaimers, and that it does not cover products marketed to the client afterwards.
Why do payment providers care about my licence scope?
Acquirers and banks price jurisdiction risk. If settlement data shows cardholders in countries the licensing entity cannot lawfully serve, the file becomes a regulatory exposure for them, and they typically respond with higher reserves, restrictions or offboarding.
About the Author
Roman Onta is an Executive Director at SINGUARD. He builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals side by side with his brother Alex Onta, and he helped on the design of eTrader, the division Alex built and leads. His ground is worldwide payment processing, AML compliance and the corporate structures brokers are built on, work the two of them carry together, shaped by executive roles in the UAE and international corporates. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.