Retail Forex brokers are currently experiencing a series of problems related to Forex Bank Accounts being blocked by major banks. AtoZ Forex investigates and provides possible scenarios.
27 October, AtoZForex – A large number of retail Forex brokers have been facing issues with their bank accounts. Many of these retail Forex brokers are facing the uncertainty on where and with which bank to hold their accounts with. The case is not so much bright in Cyprus, the Forex Broker land of Europe as two of the largest banks have stopped accepting Forex funds.
Forex Brokers to be cautious with banks
Reportedly, many financial institutions and banks have appeared to close and block Forex Broker Bank accounts, as well as there are cases when firms cannot access their funds at all. In addition, a number of extreme cases took place, while the industry is facing overall transition period both from compliance part as well as from market development perspective. Meanwhile, some brokerages have been also experiencing troubles, such as lack of security of accounts and the potential theft of capital from accounts.
Other cases involve large amounts of money being stolen from clients’ “segregated” accounts or brokers’ pooled accounts, held by Forex brokers. This appears as the signal, that Forex Brokers must seriously plan their business with banks. Some reports provide examples, such as one Forex Broker in Cyprus, as it had its accounts closed for no reason. This broker firm was then forced to use a third tier bank and has experienced funds theft from their account.
Piraeus Bank blocks Forex Bank Accounts
Meanwhile, in Cyprus, Bank of Cyprus was the pioneer to stop accepting Forex Broker accounts, while now the flag is with the Greek-owned Piraeus bank and its Cyprus branches. According to the information AtoZ Forex has received, Piraeus Bank have started to block Forex Bank Accounts. Piraeus Bank has begun to execute capital control laws without any notice. Moreover, the bank also started to restrict individuals from outside the Greek jurisdiction to withdraw more than very small funds per week, referring to the capital control laws. These laws apparently have their roots in the Greek bond crisis.
One of the Piraeus Bank’s investors, who has 100,000 in the bank account in Greece has been informed by the bank’s employees that if he wants to transfer his capital to the United Kingdom, which is his home country, they will allow him only to withdraw it at a rate of 420 EUR per week.
Reportedly, the same story is happening within the Bank of Cyprus, as it has been noticed that the brokerages’ access to their accounts is being blocked by the bank. This major bank is apparently mistreating brokerages, according to a number of reviews on the internet. Bank stated that these procedures have been taking place due to non-compliance.
Complications for Forex Brokers
Banks blocking Retail Forex Bank accounts have many side-effects to Forex brokers globally, not only in Cyprus. These includes, delays in client withdrawals, employee salary payments, service provider payments and anything that requires payment from a broader perspective.
Alternative Banks for Retail Forex Brokers
Many of the international banks have stopped accepting Retail Forex Bank accounts, which include HSBC, Bank of Cyprus and even banks from Czechia (formerly known as Czech Republic). However, there are still other opportunities depending on what you are ready to do to get a bank account:
In the UK one of the most popular banks for Retail Forex Brokers is the Lloyds bank. As long as your Forex Broker is FCA regulated, which means they have a British entity to relate to, they can get a bank account at Lloyds bank.
Sweden based Nordea bank is also becoming a somewhat popular banking option for Regulated Forex Brokers as well.
With a decent challenge EU regulated Forex brokers can also get a bank account in Deutsche Bank too, despite their recent challenges.
Meanwhile, you are also able to get a bank account in some of the American banking giants as well, however there you are required to have an account size exceeding $100 million, which most of the traditional retail Forex brokers would not be able to accommodate.
There are some banks popping up from unusual non-Forex countries, such as Azerbaijan or Georgia too. Although client on-boarding is rather easy in these countries, it is not quite safe to have your corporate bank account there. As an example, Azerbaijan banking system is going through major reform at the moment as the Oil depended country’s economy is being challenged due to the Crude Oil prices.
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