CBK's warning over online forex traders
The Central Bank of Kenya (CBK) has warned members of the public against dealing with unlicensed and unregulated online foreign exchange dealers.
In a public notice, the financial regulator said Kenyans risked being defrauded and losing their money to the money changers.
“The purpose of this notice is to warn members of the public against dealing with unlicensed and unregulated online forex dealers. They should only deal with genuine and licensed financial institutions and entities,” said CBK.
SEE ALSO :Markets lose their mojo as shilling gains
The warning adds to that issued by Capital Markets Authority (CMA) in October 2018 that threatened to clamp down on unlicensed online currency traders in a bid to regulate the forex black market.
EGM Securities and Standard Investment Bank are the only licensed online forex dealers.
EGM Securities launched the country’s first locally regulated foreign exchange electronic trading platform in July, last year, before Standard Investment Bank joined it in December 2018.
For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.
CBK noted that some of platforms are downloadable on Google Play and Apple Store and have been aggressively marketing themselves through social media and mass email.
SEE ALSO :Multi-billion shilling projects launched amid sector woes
Another characteristic of the unlicensed forex dealers, noted CBK, is that they purport to offer the best forex deals, collect and receive funds from customers in exchange for foreign or local currencies.
They also do not have required licences from either CBK or CMA and have inadequate money laundering and consumer protection safeguards.
An investigation article that Weekend Business ran on May 26, 2019, detailed how scores of Kenyans are being duped into investing their money in shadowy forex deals with promises of high returns.
“At... we invest exclusively in online forex, buying seven strong currencies like the Euro, dollar, British pound, Canadian dollar, Japanese Yen and Chinese Yuan. You can invest a minimum of between Sh10,000 to Sh100,000 and we guarantee you a return of 20 per cent every month,” said a customer service agent at one such dealer.
Some of the investors, our investigation revealed, had no idea about forex dealing and what they were putting their money into.
SEE ALSO :CBK warns public against foreign exchange dealers
The capital markets regulator estimates that about 50,000 people, including brokers, dealers and money managers, are in the business and are mainly using offshore platforms that are not overseen by Kenyan regulators to offer the service.
Tech-savvy Kenyans have increasingly been inclined to take up new products which may however open the Kenyan currency to volatility, laundering or gullible investors become vulnerable to fraud.
Do not miss out on the latest news. Join the Standard Digital Telegram channel HERE.
Central Bank of KenyaCapital Markets AuthorityForex tradingOnline forex traders