Systematic investor fraud involving illegal broker schemes would not be possible without intentionally or negligently co-operating payment service providers and banks. Only the facility to launder and move the illicit money worldwide gives illegal brokers the opportunity to rip off investors and maintain globally operating criminal organizations. In this respect, these payment service providers must be qualified as co-conspirators in the sense of criminal law and held accountable by authorities and investors.
Money laundering and investor fraud
Payment service providers (PSP) participating in illegal broker schemes do not only enable the cheating of investors. Moreover, these payment service providers launder the money for the fraudulent brokers. Money laundering is the act of concealing the transformation of profits from illegal activities and corruption into ostensibly “legitimate” assets
Since the 4th AML Directive at the latest, PSP, banks and other professional services providers have been obliged to inquire extensively about the customers and their beneficial owners. The AML directive calls it Customer Due Diligence (CDD) and the Ultimate Beneficial Ownership (UBO) audit. The aim is to exclude criminal funds from the banking system because they threaten the stability of the economy and society, as stated in the opinion on the 4th AML Directive:
Flows of illicit money can damage the integrity, stabilityDIRECTIVE (EU) 2015/849 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 May 2015
andreputation of the financial sector, and threaten the internal market of the Union as well as international development. Money laundering, terrorismfinancing and organisedcrime remain significant problems which should be addressed at Union level.
In order to facilitate their criminal activities, money launderers and
financersof terrorism could try to take advantage of the freedom of capital movements and the freedom to supply financial services which the Union’s integrated financial
EU Payment processors must adhere to the AML directives and perform AML checks on their customers and individual payments and report suspicious payments to the respective authorities. In most regulatory regimes, PSPs and banks have to implement appropriate software algorithms as part of their risk management system. In any case, the KYC/AML approach of PSPs must prevent illegal transactions from gaining access to the banking system.
According to the U.S. FBI, illegal brokers stole up to USD 10 billion per year in binary options alone in recent years. Provided that this huge number is actually close to the truth, we want to take a closer look at the payment service providers involved in illegal broker schemes identified by us during the past months..
FinTelegram has analyzed several payment service providers over the last few months as part of its research into illegal brokers. We came across companies such as
While it may be true that Jubiter is not deliberately involved in investor fraud on the illegal platforms it evidently had no KYC/AML procedures in place to prevent the misuse of the platform by illegal broker schemes. Compliance with the KYC/AML guidelines is one of the essential prerequisites for obtaining the license in Estonia. In a Jubiter statement to FinTelegram it is said that the service can be used without KYC/AML by third parties:
In the article referenced above, you have mentionedJubiter statement to FinTelegram article on SafeMarkets payment services providers
JubiterTechnologies as a payment service provider […] for illegal brokers as SafeMarkets, Golden Markets and XTraderFX […] In addition, JubiterTechnologies never accepted […] the abovementioned brokers as its clients and any claim for its connections of any sort therewith is hereby repudiated. Therefore, no KYC or AML checks were required to be applied with respect to such persons/entities, as suggested in the article.
We did not receive an answer from
The situation with the Bulgarian Investbank (www.ibank.bg) is even worse. Although Investbank is an EU-regulated financial institution it operates as a sort of offshore bank within the EU. That is where the operators of illegal brokerage schemes from the EU, Eastern Europe, United States, Russia, and Israel maintain their accounts. Millions of illicit dollars are processed via the Bulgarian bank, with significant amounts of cash transactions well above the EUR 10,000 threshold allowed by the AML rules. As an EU bank in the SEPA network, Investbank should be a watchdog to protect the SEPA system from money laundering and money from organized crime. In fact, however, the Investbank promotes these illegal activities by negligently applying the KYC/AML framework and facilitate the laundering of illicit money from ciminal organizations.
Deutsche Bank’s 2014 money laundering offenses (AML) seem almost cute against the behavior of the Bulgarian Investbank. As FinTelegram reported, Deutsche Bank was fined USD 625 million to the U.S. and U.K. at the time. the supervisory authorities.
The members of Investbank’s supervisory board are Mrs. Petia SLAVOVA, Festa Holding AD, and Mrs. Dimitriyka ANDREEVA.
Praxis Pay (Praxis Cashier)
In addition to the Estonian
PayCashier was previously known as Praxis Pay. The company claims that they are a leader in the financial services sector. Praxis Cashier System Ltd, which is officially based in Cyprus, has intensive contacts and working relations with the Israeli scene in the field of illegal brokers. Up until today, Tel Aviv is given as the place of residence on the Facebook page. Amit
In addition to Praxis Pay, Payvision, a Dutch payment service provider plays an important role in the collection and distribution of illegally received investor funds. FinTelegram received corresponding account data showing that millions of investor money are distributed via Payvision to the various offshore companies of the illegal operators.
Payvision is likely to be one of the most important money distributors of illegal brokers within the EU alongside Investbank. Questions of FinTelegram at Payvision have not been answered yet.[to be continued]
Report Suspicious Payments
If you have information about illegal money flows with illegal brokers or have lost money with illegal brokers, please let us know via our whistleblower system. We will share your information with the appropriate authorities.