Singapore Police and Monetary Authority Highlight Forex and Binary Scams

The country’s financial regulators are warning consumers after $5.8 million of losses from 142 clients

The Commercial Affairs Department (CAD) of the Singapore Police Force and Monetary Authority of Singapore (MAS) have officially stressed the dangers of dealing with unregulated brokers. The warning comes amid an increase in activity on part of such brokers.

The public is advised to exercise extreme caution when dealing with such entities as both the CAD and MAS received a substantial number of complaints from members of the public. Throughout the past year, unregulated online trading platforms were central to the loss of S$7.8 million ($5.8 million).

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The Assistant Managing Director for Capital Markets of the MAS, Mr Lee Boon Ngiap, said, “There is no regulatory safeguard for investors who choose to transact on unregulated trading platforms.  There is a greater risk of fraud when investors transact on platforms operated by unregulated entities whose backgrounds and operations cannot be easily verified.”

“Consumers should always be cautious when they come across an investment opportunity that promises high returns with assurances of little or no risks. These are likely to be a scam; if it sounds too good to be true, it most probably is,” explained the Director of CAD, David Chew Siong Tai.

Forex and Binary Options Scams

The unregulated platforms which have been targeting residents of Singapore managed to solicit the funds from unsuspecting retail investors. The number of clients of unregulated brokers who complained to official authorities increased from 40 in 2016 to 142 in 2017.

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The products which have been offered to retail investors include forex and CFDs trading on shares, indices and commodities and binary options. The relatively high net worth of Singaporean residents have lost an average of $40,000 with unregulated brokers.

Unregulated online trading platforms which are targeting residents of Singapore, are located outside of the country and are very difficult to track or verify. Typically located in offshore jurisdictions, operators of unregulated brokers are soliciting clients to transfer funds to overseas bank accounts, which are held in the names of persons different from the platform operators.

Police Reports and Illicit Ads

Singaporean authorities are recommending local victims to file reports with the local Police.

The MAS is well known as one of the safest regulators in the world. As such, the regulatory permits are very hard to obtain and are associated with rigorous compliance conditions.

The unlicensed platforms are getting in touch with prospective consumers via online advertisements, unsolicited phone calls, emails or messaging apps. In some cases, the brokers are also organizing seminars to promote the services of the unregulated brokerage. Clients of the brokerages who already have an account are also enticed to bring in new clients in exchange for a commission.

Singaporean authorities are also stressing that online trading platforms also require investors to provide their credit card details, which is another risk on itself. As we stressed yesterday, the recent announcement about a new regulatory framework on part of ESMA is likely to drive further business to unregulated jurisdictions.

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