When you first sit down to devise a plan for your business, you may consider the idea of becoming a mogul overtaking the international scene, without actually thinking about the process and potential obstacles at hand. In fact, expanding your business to another jurisdiction can take up to ten months, depending on the duration of getting the appropriate licence as required for your business, by which to do so.
Now we know that empires aren’t built overnight, but we also know that waiting for official sign off from regulatory authorities can unnecessarily prolong things and disrupt your well-constructed business development plan. Well, there could be a ground-breaking solution to this. Speaking to Royce Lane – Senior Partner at PRO LAW INTERNATIONAL – we learn about a newly developed method of obtaining a licence that will help you, almost instantly, expand your business internationally.
One of the most vital steps when expanding internationally is checking everything is compliant with the country’s legal requirements. This means obtaining the right licences and permits for the country, and perhaps for the particular city that your company may be situated in.
For example, imagine you want to expand your crypto exchange business. The cryptocurrency sector is ever-evolving and changing and many jurisdictions are yet to formally define the process via its financial regulator, yet in countries where there is more certainty around crypto, such as the USA, Japan or the UK, there are different processes and licences needed.
Let’s say you want to expand your UK crypto business to the US. In the UK, you will need to register with the Financial Conduct Authority (FCA), the national regulator that licenses non-fiat currency exchange businesses; some crypto businesses may be able to obtain an e-license or an e-money licence. The FCA guidance also states that entities which are engaged in crypto-related activities and fall under existing financial regulations for derivatives require authorisation.
To license a crypto business in the UK, you need to[1]:
- Register a legal entity (to an office) to which the existing taxation rules are applied;
- Open bank accounts for operations and cryptocurrency transactions;
- Prove that the company complies with the requirements of anti-money laundering and terrorism financing prevention legislation;
- Prepare a package of documents for obtaining a license for the cryptocurrencies exchange - with a description of risks, a business plan, policies according to AML / KYC legislation, etc.
Measures to combat terrorism and money laundering has led to licensing a cryptocurrency exchange taking a long time. For example, in the case of Wirex, the procedure took 9 months[2].
In the US, however, opening a crypto exchange service would be classified as a money services business (MSB) and hence would require a money transmitter licence. This means that exchanges need to:
- Be registered as a Money Services Businesses (financial services)
- Receive licences for such activity (for example, a BitLicense for exchanges in New York)
- Inform law enforcement authorities of transactions arousing suspicions.
- Pass the registration procedure in the United States Department of the Treasury (the registration should be extended every two years);
- Report on transactions exceeding the amount of 10 thousand USD.
Royce dubs this as his “Genius Formula” which now potentially allows his clients to use the original licence to be recognised in other jurisdictions.
On top of this, each state may have its own set of requirements and rules, so needless to say, it will take a while for everything to be finalised and authorised.
The two jurisdictions have different licences, processes and requirements for you to expand your crypto exchange. Royce says he has found a way to lessen the time it takes for you to be up and running in the new jurisdiction, but how is that possible? Speaking to him, we reveal more about his innovative idea that has simplified a somewhat complicated process to save business owners a lot of time.
He tells us that he has created a method that enables companies to use their nationally issued licence to be recognised in other jurisdictions. This will enable that particular licence to potentially become a worldwide licence – quickening the process behind expanding internationally.
He states: “No longer do you have to obtain licencing in one jurisdiction to then repeat the same process when you want to expand elsewhere. When your business grows, you usually have to re-do the same licence application for the other jurisdiction(s).”
Royce dubs this as his “Genius Formula” which now potentially allows his clients to use the original licence to be recognised in other jurisdictions.
But is there such a demand for multi-jurisdictional licences? The globe is becoming one centralised place, so a uniform process has the potential to be positively welcomed. In his field of expertise, Royce tells us how he foresees the day where there will be an international licencing body (ILB), which, he says “would be a portfolio held perhaps by the United Nations, where licences that are duly recognised by this body could automatically be used within that recognised jurisdiction, worldwide.
“Today we have a variety of jurisdictions, and, let’s say, you need to obtain different authorisation from the USA and Canada. Tomorrow, with the rise of globalisation, the two jurisdictions may just be the Earth and the Moon – this may sound farfetched, but, after all, residential rights are already being sold on the Moon.
“My formula for an international licence has simply brought a possible eventual act, more forward in time.”
“We have an unused Company set up and sitting on our shelf, called, let’s say, ABC Ltd” explains Royce.
How LARCO is changing the game
What does a ‘LARCO’ licence cover? Royce states LARCO is a ‘unique service where business people who require licencing can purchase a shelf company with already approved licences annexed to it’. This system allows you to purchase the company and potentially gain same-day licencing.
The aim is to eradicate delays and excessive legal bills. If we take our crypto exchange company above as an example, with new unused companies with licenses attached to said companies, you needn’t wait nine months or more for the approval to begin your business venture in the USA. The LARCO licence goes with the Shelf Company, then LARCO works with local authorities in other jurisdictions to obtain regulator recognition, to meet the demands of today’s centralizing world.
“We have an unused Company set up and sitting on our shelf, called, let’s say, ABC Ltd” explains Royce.
“ABC Ltd has already got an approved licence duly annexed and our client buys the company off the shelf, which means they have an approved licence ready to use from day one. Within 25 days, ABC Ltd is fully transferred to the client and then we work to apply our formula to seek official recognition elsewhere” he says.
This process is suited for particular industries, however. Royce tells us the most ideal and popular industries are: Online gaming, private or public funding, FX brokering, crypto exchange or investment.
What is wrong with the current system?
Speaking to Royce, he shares that the common time frame for obtaining a business licence to expand abroad can take eight to ten months. The conventional method of moving internationally also runs the risk of causing licence requests being rejected. Royce tells us that “around 20% of licences are rejected, usually due to an inexperienced lawyer incorrectly assessing the case, or due to a bad regulator who failed to observe the due process principles, thus progressing to judicially review the matter before the court.”
Royce’s team help you pick what licence you need for your particular business, as well as having a LARCO officer assigned to you for three months during the expansion process to ensure a smooth transition of ownership.
Do we have reason to be sceptical?
Some may be sceptical with the idea, but to ensure that no one takes advantage of the system to allow fraudulent activity to occur, there are conditions of the licence that must be met. Companies will also still need to apply for other separate licences, for example, if they need a liquor licence.
Royce reassures us, by saying that all licences are recognised and accepted by the jurisdiction’s regulators, which is confirmed by an acceptance letter.
“Yes, with this process being new, some are sceptical. But the regulator’s letter removes the scepticism.
“In essence, for example, the licence annexed to the shelf company you purchase may be issued by the EU, leaving you to be sceptical about using it in Singapore, for example. Part of the process we offer is to secure a letter from the Singapore Authority recognising this licence as suitable for use in Singapore.”
Royce’s team help you pick what licence you need for your particular business, as well as having a LARCO officer assigned to you for three months during the expansion process to ensure a smooth transition of ownership.
And in order to ensure that the client requesting a LARCO licence is a legitimate business wanting to expand their company for valid reasons, Royce uses agencies like “World-Check” and/or “Verified” for any Criminal or Civil history. Taking due diligence seriously in this area is important, and Royce states that his staff obtain Notaries KYC records from clients, to gain as much detail to ensure they will be a suitable transferee. Royce hastened to add that, “ Of course client’s criminal/civil history is private and we only share such information with our clients directly.”
Royce's Journey into Law
Royce Lane, also known for his tenacity and often referred to as “The Bulldog Lawyer”, started his journey into the legal sphere in 1983. After growing up in New Zealand, he worked in a family business with his father for four years before joining the NZ Police Force, Highway Patrol in Sept 1973, where he served for 15 years. During this time, he was a working student attending Auckland University and was thereafter assigned to police prosecutions.
After venturing to Asia, he worked at various law firms like one in the Philippines for five years. On 26th February 1996, he was shot in the head at close blank range by a gunman that was hired by a disgruntled losing opponent in a Court case that Royce acted in. After 10 days hospitalisation and recovery after the bullet was removed, Royce was surprised to learn that the local Police Chief reported nothing had been done at all, and that the National Bureau of Investigation (NBI) was not aware of this highly published case. Suspecting corruption and derelict officials, he launched his own investigation. Ten months later, he found the gunman and took him into the NBI who was charged for frustrated murder, along with the other masterminds involved.
In 1999 he was Chief General Counsel for a multinational based at Hong Kong, which was operating in 52 countries, with six legal staff reporting to him. In 2006, he retired on a garden pension for two years, and in 2009, he attained World Pro Status with a Tour Card in his much-loved game of Cue Sports, attaining two world titles, undefeated to date.
In 2013, he returned to the legal sector as General Counsel for large companies. In 2017 Royce founded Pro Law International, today with offices at London, Hong Kong and The Caribbean, with Legal Officers on board from Europe to Asia.
His firm focuses on General Counsel work, working with large companies in China, related to Alibaba. In addition, his firm has two products, one called LARCO and the other called DualPass.
[1] https://prifinance.com/en/cryptocurrency-license/uk/
[2] https://lawstrust.com/en/licence/finance/crypto-license/gb
