CySEC slaps €100,000 fine on FX broker FXVC
The Cyprus Securities and Exchange Commission ( CySEC ) announced that it has fined Finteractive Ltd (trading as FXVC) €100,000 due to shortcomings in the company’s regulatory obligations.
Accurate details of the settlement haven’t yet been made public, however the violations are related to the general principals of conduct related to the Money Laundering and Terrorist Financing Law (L. 188(Ι)/2007).
“More specifically, the investigation for which the settlement was reached, covers the period 1.8.2019 to 28.2.2021 and involved assessing the Company’s compliance with article 22(1) of the Law as to the authorisation condition laid down in article 17(2) of the Law, regarding the organisational requirements with which a CIF is required to comply,” the statement reads.
In particular, FXVC was flagged for conducting business or facilitating some activities not stated in its authorisation. Cypriot CIFs need to notify CySEC when they are providing their services in third countries. Before they can deliver their product in a given country, they need to get appropriate authorisation from the country’s regulatory authorities first.
FXVC was among a handful of Cypriot brokers that the UK’s FCA suspended their passporting rights. At the time, the British watchdog also barred the UK counterparts of Hoch Capital Ltd (trading as iTrader and tradeATF), Magnum FX (Cyprus) Ltd (trading as ET Finance), Rodeler Ltd (trading as 24option) and F1Markets Ltd (trading as Investous, StrattonMarkets and Europrime).
The City regulator said these firms failed to pay money owed to investors and charged customers undisclosed fees whilst failing to disclose the risks of trading CFDs. The Cysec has also suspended several forex brokers that were caught up in promoting their risky products in the UK.
The FCA said FXVC used a variety of inappropriate techniques, including misleading financial promotions which appeared to offer consumers the opportunity to purchase real stocks while, in fact, they were merely trading CFDs.
FXVC used pressure tactics, described by one customer as ‘relentless’, to encourage them to invest ever increasing sums of money. Some customers were even encouraged to declare they were professional investors despite not meeting the necessary criteria for such categorisation.
Shortly after the FCA’s crackdown, FXVC voluntarily turned their backs to Cyprus and decided to cease providing any investment services under its CIF authorization.
