+800 illegal FX platforms exposed by Russian central bank

abdelaziz Fathi

Russia’s central bank has detected more than 812 illegal Forex brokers operating in the country throughout 2021.

The RCB did an analysis of unregulated financial services firms it has identified last year. According to the study, illegal platforms the bank had exposed in general were 2,679. Out of this figure, there were more than 800 illegal OTC FX brokers, 948 unauthorised creditors, 222 pyramid schemes and 395 offshore securities dealers.

Last year, the regulator shared information about nearly 3000 websites with the police and the Financial Sector Computer Emergency Response Team in order to block the domains of the unauthorized firms.

“We recommend that people be more attentive, analyze and evaluate all financial proposals, especially those related to investments. Investing always involves risk. Therefore, it is necessary to use the services of only real professionals licensed by the Bank of Russia. Registers of all legal market participants are posted on the website of the Bank of Russia. We also publish a so-called warning list – a list of companies that have signs of illegal activities or financial pyramids. Check incoming offers at the slightest suspicion that scammers are contacting you! If you become aware of such schemes or become a victim of them, be sure to report this to law enforcement agencies and the Bank of Russia. Such information will help to expose malefactors faster,” says Valery Lyakh, director of the Department for Combating Unfair Practices.

A notable increase in solicitations during lockdown

Russia’s central bank said earlier it had spotted a notable increase in solicitations from unregulated brokers and specifically warned the public from doing business with forex  platforms that promise an income stream during the Covid-19 lockdown.

The mega regulator reminds Russians to exercise caution when considering aggressive promotions as a basis for investment decisions. It was also alerted to forex platforms telling dummies that risks associated with online trading quite low and even those with limited experience could earn a steady income in volatile markets.

The latest caution comes as Russian financial regulators said earlier that they observed a continued downturn in complaints filed by customers regarding Forex dealers that provide licensed OTC FX services to Russian residents.

It would be quite the understatement to say Russian investors’ interest in speculative products has been unwinding as a result of stringent FX regulations and the RCB’s efforts to limit the marketing of such products. A more accurate description for this drop in complaints would be something closer to the idea that recent clampdown is pushing traders away from licensed brokers in Russia to open accounts in offshore jurisdictions.

In a window lasting just a little over two years, the Bank of Russia eliminated competition from the entire forex market in the country after it decided to strip several brokerage firms of their license to trade in forex.

Russia has sought to crack down on both crypto and FX industries in recent months, which has long flocked to other jurisdictions. Part of its crackdown, which dates back to 2018, the Russian central bank has been identifying companies it says might be illegally offering FX trading to local consumers.

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