The Central Bank of Kenya has issued a caution on trading with unregistered foreign exchange dealers. The warning has come amid the proliferation of outfits that are aggressively marketing themselves as genuine forex traders and drawing thousands of Kenyans into giving them money to invest.
An investigation that Sunday Standard carried out in May revealed that some of these dealers have no licences to show and instead cite their association with shadowy international firms to dupe their clients.
Some of these forex dealers mirror pyramid schemes in that clients are encouraged to introduce others for a commission.
Suffice to say, investments built on such shaky ground can only end in misery. CBK is alive to the existence of these unlicensed traders who need to be kept on close watch, just like anyone else operating in the sector. Anyone collecting money from the public for supposed investment must be put under the same rules and microscope established by the relevant authorities.
Buying and selling of foreign exchange is an intricate business that requires substantial knowledge of the financial markets and the risks therein, which many of the dealers and their customers might not have.
The public has been made aware of the inherent dangers of putting money in the hands of such outfits. What remains is for CBK to nip them in the bud.
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