According to Charles Randell, a growing number of investors have been defrauded in FX and crypto scams in the UK. He has also outlined their approach to combating these types of fraud.
September 5, 2019 | AtoZ Markets - While speaking at the Cambridge Economic Crime Symposium on Wednesday, Chair of the Financial Conduct Authority (FCA), Charles Randell pointed out that financial crime, especially fraud against individuals, "has reached epidemic proportions".
According to him, this is “one of the most damaging financial crimes is investment fraud, where people are scammed out of their savings.” These ones are usually driven by pensions freedoms and the growth of online advertisements for "get-rich-quick" schemes.
It is no question that fraud within the financial industry has become a real threat for investors. In recent years, reports of investment scams have skyrocketed and we at AtoZmarkets are at alert, always covering – almost on a daily basis – warnings from global regulators as they flag suspected scams and unauthorized entities.
Fx and Crypto scams in the UK are rapidly increasing
Regarding the number of of those affected, Randell admitted that the regulator is uncertain with the number of people who had fallen victim of transferring their savings to scammers, nevertheless, “it is clear that it could be a large number”.
While there is no specific figure, however, the Crime Survey for England and Wales for 2018/19 puts the total volume of fraud affecting individuals at 3.8 million cases, which is about one-third of the total volume of 11.2 million crimes. Previously, the FCA specifically stated that a total of £27 million ($34.4 million) was lost by investors in the Forex and cryptocurrency industry to scams in the 2018/2019 fiscal year.
Furthermore, authorities of the British regulator have received 1,834 reports including crypto scams in 2018, which is almost a four-fold increase when compared with the twelve-month period. To combat this financial fraud, Randell said that he posed a number of questions that need to be addressed.
FCA outlines approach in combating FX scams in the UK
In efforts to tackle investment fraud, Randell outlined that the watchdog has laid out three strategies:
- Focusing on the firms it operates and monitoring their regulated activities,
- Alerting consumers to the risks of scams, and
- Taking action to shut down unauthorized investment businesses.
“Last year we published over 500 consumer alerts about unauthorized firms, and we currently have over 40 live enforcement investigations in this area,” Randell highlighted.
“Nevertheless, the FCA is taking action against the sale of specific types of high-risk investment to retail investors. Such as our proposed changes for peer-to-peer lending. Or our ban on high-risk bets on investments. Or our ban on bets on cryptocurrencies.
He also stressed: “We are increasing our activities to disrupt harmful minibond issuance, although because the activity is not currently regulated and much of the issuance is conducted by firms we don’t authorize, there is a limit to what we can do in this space.”
Internet giants must play their part to curb financial crimes
During his speech, the Chair of the FCA also highlighted another area that has facilitated a huge amount of fraud. It appears the due diligence carried out on privacy and stopping data breaches may have fallen well short of the expected standard. Hence, he called on internet giants to take down suspected fraudulent activity immediately when they are requested to do so by authorities.
“Major companies can effectively enable a huge amount of fraud,” Randell outlined. “The companies which allow people’s personal data to be stolen. The companies which promote advertisements for scams on the internet and thereby profit from these crimes. Quite frankly, they don’t always play their part in remedying the harm they create.”
“I don’t believe that these measures would prejudice freedom of speech. Or that dissent and democracy in our society will be any weaker if we throw some well-aimed grit into the cogs of the online scammers.”
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