Regulator names 12 fraudulent online trading companies that most often target Russian investors

Maria Nikolova

Russia’s Federal Financial Monitoring Service warns that a raft of foreign entities are offering investment services in Russia without having the right to do so.

Russia’s Federal Financial Monitoring Service has published a warning on its website about a number of foreign entities that illegally offer online trading services to Russian investors.

These entities, according to the regulator, abuse the insufficient knowledge of Russians about the securities market regulation, and solicit investments into activities such as Forex trading. Typically, the fraudsters create a facade that the deposit of investors are increasing thanks to gains and demand additional investments. Then, any attempt by the clients to withdraw their money, the balance suddenly becomes “zero” and the firm stops communicating with its clients.

According to the regulator, the companies that most often engage in such fraudulent activities with regard to the Russian market are: «Teletrade», «GRANDCAPITAL», «Delloy Trаde», «GLOBAL FX», «Kappabrokers», «GO CAPITALS FX», «KBCapitals»; «10 BROKERS»; «Swis Trade»; «BORN to TRADE», «Barclays Trade», «WerCrypto».

All of these companies are non-Russian entities and do not have the requisite licenses nor are they members of self-regulatory organizations.

Let’s note that the Central Bank of Russia continues its quest against companies that are not licensed in Russia but seek to find way to target Russian investors. In July last year, the Bank published a Letter to banks, non-credit financial firms and self-regulatory organizations, in which it warns Russian financial companies against serving as intermediaries for foreign companies.

The regulator deems it unacceptable that an investor may obtain information and/or sign a contract with a foreign entity via the website and/or office of a Russian company.

The Bank of Russia has repeatedly warned investors of the risks involved in signing a contract with foreign financial entities: the consumers are not protected by Russian laws in case of problems with the companies. However, the incessant stream of complaints serves as a piece of proof that violations continue. Most often, investors complain that they were not informed they were entering into a contract with a non-Russian entity. Instead, the investors were misled that they were signing contracts with the entity whose Russian office they were visiting.

In July 2018, the central bank reminded market participants that the Russian laws impose a set of restrictions on foreign entities that want to offer their services in Russia. Avoiding these restrictions carries a heavy amount of risks for consumers and undermines the reputation of the financial industry in Russia. In case of law violation (for instance, publishing of a link to a website of a foreign entity on the website of a Russian entity), the Bank of Russia may penalize the company that has committed the violation.

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