FMA warning against offshore firms


14 April, AtoZForex, Lagos – Forex trading is considered a high risk and complicated investment, a fact that most scam brokers or FX operators fail to disclose to potential clients or victims. The Financial Markets Authority (FMA) is now taking further steps to fortify the safety of the financial industry by issuing warnings against offshore firms.

Not only is the recent Panama papers the lead for the regulator to take action, but since July 2014 the FMA has received over 2,000 complaints and more than half were related to scams, or money withheld by unregistered companies as well as offshore firms. Notwithstanding, the regulator is imploring investors to only deal with firms within the FMA jurisdiction, therefore a FMA warning against offshore firms has been issued.

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The lure of big returns

Most of the times, frauds try to lure investors by offering a big return on investment products like forex trading services, investment schemes, property seminars or forex training software. This is highly perpetrated by offshore firms, hence the FMA warning against offshore firms. Liam Mason, director of Regulation, commented:

“The Financial Markets Conduct Act has determined what products are regulated and it has strengthened the powers we have over the providers’ conduct. Unfortunately, we recognize there will always be businesses that deliberately set up outside our jurisdiction and still manage to entice New Zealand investors to use their services.”

See also: CySEC Panama papers investigation on CIFs

Even though the regulator has always been in the habit of issuing FMA public alerts about any firm which is allegedly operating dishonestly or without due authorization, this has proven insufficient to combat the growing threat of scam schemes in the region.

“For example Forex trading is considered a high risk, complicated investment and so we recommend consumers protect themselves as much as possible when contemplating this – or indeed any – investment. Do some research and take advantage of the Financial Markets Conduct Act and the protections it offers the investor,” says Mr Mason.

FMA warns

The New Zealand regulator advises that investors should only deal with businesses with the following characteristics:

  • The location of the provider - the FMA has more ability to help you if the business is in New Zealand
  • The Companies Office website – does the business have a New Zealand Director and does the forex broker have a genuine license for the financial product or service they provide?
  • Be wary of Forex trading ‘training’ and ‘tools’ that promise a particular product or technique that gives access to better exchange rates or easy money. While software programmes and training courses can teach an investor how to make forex trades, no person or programme can ever accurately predict movement in foreign currencies. Property seminars also can make promises of no-fail wins on the property market.

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