CySEC cancels license of 101investing parent following €200,000 fine

abdelaziz Fathi

The Cyprus Securities and Exchange Commission (CySEC) confirmed on Tuesday that it has wholly withdrawn the Cyprus Investment Firm (CIF) License of FX retail brokerage firm FXBFI Broker Financial Invest Ltd, trading as 101investing.

According to the regulatory manifest, FXBFI has had its CIF authorisation withdrawn based on multiple violations of the local investment laws.

The move comes nearly three months after the regulator reached a settlement with FXBFI in June, ordering the firm to pay €50,000 for violating the Investment Services and Activities and Regulated Markets Law.

As a result of the CySEC’s audits conducted between July 2020 to January 2021, several types of violations were found in multiple compliance areas. During the period under review, the company fell short in implementing effective policies, controls, and procedures to mitigate the risks associated with money laundering and terrorist financing. Of particular concern was their inadequate examination of transactions that exhibited a heightened vulnerability to involvement in such illicit activities.

In relation to the fine, CySEC said the violations related to non-compliance with the with section 58(e) of the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007, as well as paragraph 26 of the Directive on the prevention and suppression of money laundering and terrorist financing.

Back in August 2022, the watchdog also imposed a substantial administrative fine of €150,000 in a separate regulatory action. At the time, CySEC explained that the penalty resolves allegations of non-compliance with regulatory requirements, including conflicts of interest and information provided to clients.

In addition, FXBFI was probed by CySEC for lack of compliance with regulatory requirements that govern the assessment of suitability and appropriateness of clients, as well as its obligation to execute orders on the most favourable terms to their customers.

To stay on top of compliance, Cypriot brokers must gain insights into the financial situation of the client, including his investment knowledge, experience, and objectives. The genesis of these requirements lies in the Markets in Financial Instruments Directive (MiFID II) regulation.

Once confirmed by a separate decision to be announced later, FXBFI will be no longer licensed and regulated by CySEC and thus cannot provide financial or ancillary services. The regulator will give the broker three months from that date to settle its obligations arising from the investment services that will be lapsed, during which time it remains under the Cypriot watchdog’s supervision.

Under the island country’s regulatory framework, the company must return all outstanding balances to its clients and handle all of their complaints. In addition, FXBFI must provide confirmation from its external auditor that it does not have any pending obligations and must include details of each of the company’s clients.

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