The Cyprus Securities and Exchange Commission (CySEC) announced that it has fined XTrade Europe Ltd €200,000 due to shortcomings in the company’s anti-money laundering programs.
Accurate details of the settlement haven’t yet been made public, however the violations are related to the general principals of conduct related to the Money Laundering and Terrorist Financing Law (L. 188(Ι)/2007). The enforcement action was a result of the compliance onsite investigation started by the regulator back in June 2018
In deciding the disciplinary action, the authority considered it needed to send a clear deterrent message about the importance of effective internal anti-money laundering controls.
The deficiencies, cited in the regulator’s order against Xtrade Europe, included weaknesses in identifying and handling customer’s accounts and transactions and for not complying with rules on customer due diligence and continuous monitoring of business relationships. Overall, the statement describes a lackluster anti-money laundering program that may have allowed numerous risky clients/trades to go unreported.
The Cysec’s circular further reads:
“The settlement reached involved the assessment of the Company’s compliance with articles of L.188(I)/2007 and the Directive issued thereof as of June 2018, relating to the implementation of adequate and appropriate measures in performing customer due diligence, in assessing and obtaining information from customers on the purpose and intended nature of the business relationship, the identification/recording/evaluation of the possible risks faced by the CIFs, the implementation of measures and procedures to manage and mitigate risks, the adequacy of the data/information held for customer’s identity and their economic profile, and the exercise of ongoing monitoring of customer’s accounts and transactions.”
Legal battle with XTB
After several months of pause, the Cypriot regulator is once again flexing their muscles and actively finding compliance irregularities. The news about the settlement with Xtrade comes a few days after it hit , Indication Investments Ltd, with a €160,000 fine.
The Cysec has also suspended several forex brokers that were caught up in promoting their risky products in the UK. The watchdog dropped the hammer after its UK counterpart said the brands including iTrader and tradeATF, Magnum FX (Cyprus) Ltd, 24option and F1Markets Ltd used fake celebrity endorsements for their products on social media.
XTrade is operated by XFR Financial Ltd and has offices in five continents. The company is regulated by the Cyprus financial watchdog CySEC (under Xtrade Europe), the IFSC of Belize as Xtrade.BLZ, and also holds a licence from the Australian watchdog ASIC.
Earlier in 2016, XF Financial Limited decided to consolidate its offering and phase out the older brand, XForex. It now officially operates under Xtrade Group. The company made headlines in the same year after it tapped the as its official ambassador.
XTrade was defeated two years ago in a legal fight over a disputed brand name in Poland, as the Polish FX brokerage XTB filed a lawsuit claiming the name is too similar to its own trademarked name. The court decided that XTrade is forbidden to use the following verbal and word markings: ‘XTB’, ‘X-Trade’ and ‘XTrade’.
The dispute arose over concerns that similar business names are confusing customers, and because the listed Polish broker claims the similarity has caused harm to its business particularly with both brands offering the same services on the same market. It argued that consumers wrongly assume that XTB and XTrade are related when they are not.