CySEC Fines Depaho Ltd for €233k Following Myriad Compliance Shortcomings

Depaho Ltd has incurred a series of fines totaling €233k after it failed to appropriately adhere to CySEC's compliance legislation

The Cyprus Securities and Exchange Commission (CySEC) has issued a fine of $246,500 (€233,000) against Depaho Ltd., the company behind the foreign exchange (FX) broker FXGM, according to a CySEC regulatory filing.

Earlier today, CySEC made headlines after it issued an announcement revealing that it had entered into a settlement agreement with IronFX Global. Per the regulatory document, CySEC determined that there was a possibility that company had been in violation of the legislative framework under which Cyprus Investment Firms operate.

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The settlement agreement between CySEC and IronFX focused on “reasonable suspicions of having committed possible infractions of the Investment Services and Activities and Regulated Markets Law of 2007.”

Depaho’s Compliance Record in Focus 

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According to the CySEC filing, the regulator imposed a total administrative fine of $246,500 to Depaho Ltd for non-compliance with the following legislation:

  • The Investment Services and Activities and Regulated Markets Law of 2007, as amended from time to time
  • The Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007, as amended from time to time
  • The Directive DI 144-2007-01 of 2012 of the Securities and Exchange Commission for the Authorisation and Operating Conditions of CIFs
  • The Directive DI 144-2007-02 of 2012 of the Securities and Exchange Commission for the professional competence of Investment Firms and the natural persons employed by them
  • The Directive DI 144-2007-08 of 2012 of the Securities and Exchange Commission for the Prevention of Money Laundering and Terrorist Financing

Consequently, Depaho Ltd racked up a total of $246,500 in fines for several infractions. This included a fine of $74,000 (€70,000) for non-compliance of its investment service, which was not stated in its authorisaton.

Furthermore, Depaho Ltd incurred a fine of $3,175 (€3,000) for non-compliance having failed to comply at all times with the authorisation and operating conditions, since it did had not applied adequate policies and procedures to ensure an appropriate level of compliance. In particular, Depaho abstained from providing an internal operations manual to CySEC and did not give a procedure for warning clients on the non-appropriateness of a product/service, where necessary.

Depaho was also fined $21,150 (€20,000) for not ensuring for efficient and appropriate supervision of the customer support service, outsourced to an assortment of external agencies. Moreover, the group was also forced to pay a fine of $42,300 (€40,000) for failing to act fairly, honestly and professionally in accordance with its clientele. An additional $105,800 (€100,000) in fines was levied against Depaho for a litany of non-compliance measures, as stipulated by CySEC back on October 12, 2015.

Back in 2014, Depaho Ltd purchased the business activities and brand name of FXGM in a strategic acquisition. FXGM offers a number of financial services and instruments including foreign exchange (FX), equities, contracts-for-difference (CFDs) and others.

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