An offshore broker is licensed in a jurisdiction with lighter-touch financial regulation — common examples include Belize (IFSC), Vanuatu, Mauritius, and Seychelles — typically offering higher leverage and fewer restrictions than tier-1 regulators allow. The trade-off is materially weaker client protections: lower or no compensation-scheme coverage, less capital-adequacy oversight, and often less rigorous enforcement if a dispute arises.
Offshore licensing isn't automatically fraudulent, but it shifts meaningfully more risk onto the client, which is why it's worth weighing the higher leverage on offer against the reduced regulatory safety net.
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Guide
How a Broker Holds Your Money
Segregated accounts, regulatory capital and compensation schemes are three different protections that get described in one sentence. What each covers, what it does not, and how to check which apply to you.