Unregulated brokerages offering their services in the EU are facing another payment option shut down. After MasterCard and VISA opened the floodgates, Skrill is the next payment option that is bowing to regulatory pressures.
In a letter sent to brokers earlier this week, Skrill demanded from brokers operating in the EU a copy of their financial services license. The company is citing recent changes to regulations and card scheme rules as the trigger for its request.
Binary options and contracts for difference (CFDs) are the instruments which have been explicitly mentioned by Skrill. The company is requesting the additional documentation to be presented to it by tomorrow.
Brokers which are offering binary options to UK residents are explicitly asked to provide the company with an FCA license.
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Restrictions to Merchant Accounts
In the cases when the brokers who have received the letter from Skrill do not act on it, the company will take certain measures. The merchant account of the companies will be restricted regionally. Skrill customers who are registered in the UK or the EU will be unable to transfer funds to the brokers as of November 30.
Brokers will still be able to return funds to their clients for 14 days after the restriction is put in place. This effectively means that after the middle of December, brokers will need to ask clients to provide another withdrawals method for their clients.
Skrill is requesting that brokers remove the Skrill deposit option for its clients within the EU. The companies are also asked to remove the corporate logos of the payments company from their websites and banner ads.
This last addition to the coordinated effort on the part of EU authorities to protect EU clients could be the next chapter in a series of measures by other providers of payment services. VISA and MasterCard have announced measures to curb illicit operators earlier this year.
With Skrill joining the party, the likelihood that other companies such as Neteller, Webmoney, Fasapay, and Sofort will follow suit is substantial. EU authorities appear strongly committed to providing to EU residents the necessary protections from unregulated brokers.