CySEC Imposes Fine on ICFD Ltd Due to Several Violations

February 22, 2018

The Cyprus Securities and Exchange Commission (CySEC), has imposed a €138,000 fine on an FX provider operating under the name ICFD Ltd.

The decision to penalize the company stems from a long list of allegations, illustrating the company’s failure to comply with regulatory confinements put in place by the Cypriot regulatory body.

Allegations Against the Company

The underlying violation referred to the company providing financial services that it was not authorized to offer by CySEC. One specific unlawful service was providing investment advice, without proper licensing.

The list of accusations also notes that the company did not act in the best interests of its clients or prospective clients, while also failing to explicitly define the high-risk nature of the investments.

Moreover, ICFD Ltd did not request that clients provide information about their level of trading experience, in the particular investments that were being offered. The allegations further claim that the company went as far as to even encourage clients to not provide such information, which is in direct contradiction with the regulatory framework put in place by CySEC.

In addition to the financial penalty of €138,000, CySEC says that it has also enforced changes that must be made by the company, to ensure the future adherence to the Investment Services and Activities and Regulated Markets Act of 2017.

Demetra Kalogerou, Chairwoman of CySEC, said in a statement: “Following CySEC’s investigation, the Company was found to be in violation of the laws we have in place and enforce to protect retail investors trading in speculative financial products, such as forex. The Company in question showed, among others, deficiencies in properly disclosing the risks to existing and prospective investors, and in some cases, even served to promote and actively market certain products at the expense of providing clear and non-misleading information.”

She continued: “Having enforced a number of corrective measures in addition to those financial penalties imposed on the Company, CySEC will continue to keep the Company under close supervision and it will remain subject to follow-up inspections.”

CySEC as Vigilant as Ever

CySEC has been stepping up its requirements from companies who want to operate under its jurisdiction. The regulator has recently implemented a new law, requiring all CySEC-licensed brokers to disclose a full list of all countries in which they offer services. The list must also include proper and legal authorization from the relevant authorities in each country.

The new law has already made an impact on the FX industry, as brokers scramble to either produce the necessary documentation, or decide not to operate in a particular country as a result. CySEC licensed broker Alfa-Forex has already withdrawn its operations from Russia, in what appears to be a direct response to the new obligations.

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