Unregistered and fraudulent firms plague the FX industry. Investors end up losing their money to these unregistered brokers, and this casts the industry as a whole in a bad light.
Investors are encouraged to apply due diligence in their pursuit of an FX broker through which they can engage in trade. On Thursday, the Belizean IFSC (International Financial Services Commission) issued various warnings regarding an influx of unregistered brokers on the market. The watchdog pointed out that this unregistered FX and binary options brokers are involved in the business in different sectors.
Unregistered brokers use a variety of methods to try and dupe investors. The fake firms use the branding of other legitimate firms, or they use similar branding, which confuses clients into thinking they are engaging with the proper firms. Another method used is these unregistered firms pretend they are affiliated with popular firms.
The use of fraudulent licenses
A number of these unauthorized firms have been exposed for making use of forged or expired business licenses. This makes their business illegal, and the Belizean regulator has instructed such brokerage firms to put a stop to all financial activities they are involved in. These firms are in violation of the country’s laws, and the IFSC may have to initiate legal proceedings against brokerages that do not comply with the order to cease operations.
Belize’s financial watchdog published a list of financial firms that are no longer licensed with the regulatory body. The list was released at the beginning of the year, and it came with a warning to these firms. The firms need to renew their licenses to ensure that they remain compliant with the regulatory requirements; otherwise, they risk criminal charges. The regulator clarified that all cases regarding the expiry of permits are treated differently, and there is no blanket approach applied to such matters.
Cryptocurrency comes to the fray
While the Belizean watchdog is taking measures to counter the rising number of unregistered FX and binary options brokers operating in the country, the regulator also has to take cognizance of the growing crypto trading industry. Regulators across the world have had to make changes to their rules and regulations to ensure that they have the trade of digital assets under control.
Crypto trading also faces similar issues with unregistered and fraudulent firms. In a bid to protect investors from falling victim to these unregistered brokers, the IFSC has already put in place measures to keep an eye on crypto related businesses and activity. Unauthorized firms and businesses in the crypto industry also risk being prosecuted by the regulatory authority.