Scotland takes steps to eliminate binary options websites’ smokescreen

Maria Nikolova

Scottish limited partnerships, which often act as corporate fronts for binary options sites, will have to reveal their owners’ identities, under new regulations that come into force on Monday.

An important legal change is about to put an end to the abuse of the status of Scottish limited partnerships (SLPs) by binary options fraudsters. Scottish Partnerships (Register of People with Significant Control) Regulations 2017, which come into force on June 26, 2017, will bring SLPs into line with others in the UK, as they will have to disclose the identity of their beneficial owners within 28 days.

In case the partnerships fail to comply, they will face daily fines of up to £500.

The UK Government estimates that around 30,000 firms registered as Scottish limited partnerships will have to reveal their owners’ identities under the new laws.

The changes come amid allegations that some of these companies are vehicles of crime, with a 236% jump in the number of Scottish limited partnerships registered between March 2011 and March 2016.

FinanceFeeds has noted that SLPs are often used by binary options fraudsters thanks to the special status of such partnerships – thus far, they have been allowed not to reveal the identity of their owners and to file no accounts. A recent report by the Scottish Herald has claimed that 43 Scottish shell companies act as corporate fronts for binary options sites. Of these, 41 are Scottish limited partnerships. Moreover, at least 22 of the shell companies are named as owners or payment processors on websites subject to international warnings.

Unlike those set up in England, Wales and Northern Ireland, Scottish limited partnerships have their own “legal personality”. This means that they can hold assets, borrow money from banks and enter into contracts. A limited partnership is a particular type of business made up of a number of partners, who can be people or other business entities.

Under the new laws, Scottish limited partnerships will have to provide information about the people or legal entities that have significant control. There will be guidance alongside the regulations to help SLPs to establish who has significant control over them and to understand the detail of the new rules.

The information provided by Scottish limited partnerships will be published on the Companies House register.

Scottish Secretary David Mundell said:

“Campaign groups and media activity have highlighted growing concerns that SLPs had the potential to be used for criminal activity, and by introducing stronger deterrents the UK government is encouraging transparency.”

Read this next

Executive Moves

YourBourse hires 3 executives to transform development procedures

“Valter, Maria, and Sergey bring decades of experience in the FX industry to our company and I’m very excited how they will enable our ambitious growth plans.”

Technology

Baton adds OCC to collateral management network

“For the FCM community, this translates into ensuring money isn’t being left on the table. Our FCM clients are already using the Baton platform to move tens of billions of dollars of collateral every week.”

Retail FX

eToro buys US rival Gatsby to expand zero-fee trading offering

Israeli social trading and multi-asset brokerage company eToro has secured the regulatory nod to acquire no-fee trading app Gatsby as it aims to expand its business in the US.

Executive Moves

Genesis Global snatches CMO Jason Jhonson from metaverse company

The hire of Jhonson follows the announcement that Genesis raised $20 million in fresh funding from US banking giants, Bank of America, BNY Mellon and Citi.

Digital Assets

Celsius subsidiary GK8 integrates with Polygon while looking for new owner

“This integration affords our customers more agility in managing their crypto assets, which is key to creating new revenue streams.”

Digital Assets

BDO Italia audits Tether reserves to release monthly attestation

World’s largest stablecoin issuer, Tether has switched the accounting firm that audits the massive reserves that back its USDT token to BDO Italia, the 5th largest accounting firm in the world.

Retail FX

Libertex bags multi-year sponsorship deal with FC Bayern

Indication Investments Ltd, the operator of FX retail brand Libertex, has secured a lucrative sponsorship deal with German soccer giant FC Bayern.

Institutional FX

PrimeXM reports lower volumes for July as summer lull bites

PrimeXM has reported weaker trading volumes for July 2022, in line with other institutional and retail platforms that saw the activity of their clients dropped compared to a month earlier.

Retail FX

FCA warns of ATFX Global Trading / ATFXcoin

In its latest clampdown against the specific type of ‘clone fraud’, the Financial Conduct Authority (FCA) has warned local investors to watch out for a company called ATFX Global Trading / ATFXcoin.

<