CySEC fines BDSwiss €100,000 for redirecting users to unregulated offshore entities
In 2021, the UK FCA banned BDSwiss for the same reason. The FCA investigation found that 99% of BDSwiss’ UK consumers were actually onboarded to the group’s entities regulated elsewhere.
The Cyprus Securities and Exchange Commission (CySEC) has imposed an administrative fine of €100,000 on BDSwiss Holding Ltd, an entity that holds a CIF license issued by the Cyprus regulator.
The €100,000 penalty stems from the financial watchdog finding that BDSwiss Holding Ltd enabled offshore companies with which it was associated, to refer on the CIF’s status, as a Cyprus Investment Firm, to attract clients to whom they offered investment services in CFDs.
That was without requiring customers to pay initial margin protection and not giving the necessary risk warning, as it would have to, if the provider was the CIF, avoiding the application of the statutory requirement.
In other words, BDSwiss was found to have misled clients by onboarding them on the basis of being regulated by CySEC, while in fact, the CFD broker redirected them to unregulated offshore companies.
BDSwiss violated article 42 of Regulation (EU) 600/2014, paragraph 5 of DI87-09
CySEC explained that BDswiss was fined €100,000 for non-compliance with article 42 of Regulation (EU) 600/2014, as specified in paragraph 5 of DI87-09, during the year 2021.
BDSwiss engaged “in activities that resulted in the circumvention of the requirements of paragraph 4(1)(a)(initial margin) and (e)(risk warning) of DI87-09 by enabling offshore companies with which it was associated, to refer on the CIF’s status, as a Cyprus Investment Firm, licensed by CySEC, to attract clients to whom they offered investment services in CFDs without:
• requiring customers to pay initial margin protection,
• giving the necessary risk warning, as it would have to, if the provider was the CIF, avoiding the application of the statutory requirement.
FCA banned BDSwiss in the UK in 2021 for the same reason
In 2021, BDSwiss Holding and its associated brands were barred from operating in the UK after an investigation found investors were being offered high-risk CFDs using affiliate endorsements on social media.
According to the FCA, BDSwiss Group played up the fact that one of its firms was regulated in the UK to “convey legitimacy on the group as a whole.” The FCA investigation found that 99% of BDSwiss’ UK consumers were actually onboarded to the group’s entities regulated elsewhere.
The watchdog highlighted its concerns over financial promotions that falsely implied that all of the firm’s activities were regulated by the FCA, when in fact they were not. In particular, the overseas firms did not comply with the FCA’s restrictions on the marketing and sale of CFDs to retail consumers.
BDSwiss operates several brands regulated by Seychelles’ Financial Services Commission, the Cyprus Securities and Exchange Commission (CySEC), and the Financial Services Commission (FSC – Mauritius).
