The Cyprus Securities and Exchange Commission (CySEC) has announced that the Investors Compensation Fund (ICF) has withdrawn the membership of four Cyprus-based investment firms: Stone Edge Capital Ltd, Holiway Investments Ltd, FXBFI Broker Financial Invest Ltd and KAB Strategy Ltd.

CySEC Withdraws ICF Membership of Four Investment Firms

According to the announcement, the ICF revoked the membership of these firms following CySEC's decision to withdraw their Cyprus Investment Firm (CIF) authorizations.

However, covered clients of the four firms will still be able to file compensation claims for investment operations carried out before the membership withdrawal, provided they meet the eligibility criteria outlined in CySEC's directives.

Διαγραφή μελών από το Ταμείο Αποζημίωσης Επενδυτών (ΤΑΕ)

Withdrawal of Investors Compensation Fund (ICF) membershiphttps://t.co/Knj3CBr4F2

— CySEC (@CySEC_official) January 11, 2024

The ICF was established to compensate covered investors if the CIF cannot fulfill its obligations. As per regulations, firms authorized as CIFs in Cyprus must be ICF members. Consequently, when CySEC revokes a firm's CIF license, the ICF will cancel their membership as well.

When and How the Firms Lost Their CIF Licenses

In the case of KAB Strategy, the decision to withdraw its license was announced in the second half of 2023, following the companies' voluntary renunciation of it. On the other hand, FXBFI Broker Financial Invest, also voluntary renounced it licence, but this occurred after a series of enforcement actions against the company in the past.

The regulator identified that the firm had not established sufficient AML/CFT policies, controls, and procedures to effectively counter and manage risks related to money laundering and terrorist financing. This action resulted in a €50,000 penalty being levied on FXBFI, the operator of 101investing.

In the case of Stone Edge Capital and Holiway Investments, the licenses cancellations were dictated by an investigations conducted by CySEC, which revealed that the entities had violated the terms of the CIF authorization.

CySEC pointed out in May that Stone Edge Capital was not in compliance with organizational standards and did not establish sufficient and suitable systems to identify transactions associated with money laundering. Additionally, it neglected to put in place systems and procedures for internal reporting.