Originally Syndicated on May 20, 2024 @ 10:18 am
EFRI, however, is unable to assess whether or not these PSPs’ involvement in schemes is against any laws or regulations. Nevertheless, the interests of the damaged retail investors must come first when conducting audits. All too often, the competent regulatory authorities ignore these frauds and the payment processors that perpetrate them. EFRI aims to support regulators to safeguard the interests of the retail investors who fell for the scam.
The particular case is the International Fintech UAB, which is governed by the Bank of Lithuania and is registered in Lithuania. For instance, it was a payment service provider (PSP) in the massive KontoFX broker scam. We sincerely hope that the Bank of Lithuania will grant EFRI’s request for an audit, on behalf of the small investors who have experienced significant losses. For the EU financial market to remain secure, PSPs engaged in high-risk operations must undoubtedly be closely watched.
Steer clear of KontoFX since it isn’t overseen by a reputable regulator.
Steer clear of brokers that have no regulations at all.
That being said, only because a broker is regulated does not ensure that your money is secure. The key distinction is the organisation that oversees the broker.
Top-tier regulators are self-regulatory or regulatory bodies that implement, monitor, and uphold the highest standards and regulations to guarantee that brokers under their supervision don’t commit fraud. Fair pricing, transparent transaction execution, and a controlled trading environment are just a few of the highest regulatory criteria and practices that a broker must uphold when it comes to oversight by a top-tier regulator.
In comparison to top-tier regulators, mid-tier regulators typically operate in less complex legal and regulatory environments and have less severe oversight, which could lead to a less complete level of protection for investors.
Brokers under the jurisdiction of mid-tier authorities are usually subject to less stringent financial and operational restrictions, which may lead to less meticulous operations or a higher probability of fraudulent activities.
The least thorough supervision of brokerage companies is typically provided by lower-tier regulators. Low-tier authorities that regulate brokers usually have less stringent regulations and enforcement of compliance. Customers have few protections because these regulators frequently offer little to no compensation funds or methods for protecting investors.
There is a high probability that brokers regulated by low-tier authorities might apply unfair pricing practices, opaque trade execution methods and schemes that may lead to conflict of interest with their clients. Dealing with brokers regulated by low-tier authorities carries a higher risk of encountering unscrupulous brokers, or even scams or fraud.
