The Commercial Affairs Department (CAD) of the Singapore Police Force and Monetary Authority of Singapore (MAS) have advised the public to exercise extreme caution when dealing with unregulated online trading platforms.
CAD and MAS have received an increasing number of complaints from members of the public involving losses from unregulated online trading platforms over the past year. These unregulated trading platforms allow investors to trade a wide range of products, such as foreign exchange, shares, commodities and binary options. In 2017, the CAD received 142 reports from consumers who lost a total of S$7.8 million from trading with these unlicensed platforms, up from 40 reports in 2016.
Risks of online platforms located outside Singapore
Most unregulated online trading platforms tend to be located outside Singapore, posing greater fraud risk to consumers since the credibility of the online platforms’ operations cannot be easily verified. Investors will also face challenges in pursuing claims against operators based overseas.
Risks relating to financial transactions
Investors are often instructed by operators of unregulated online trading platforms to transfer monies to overseas bank accounts, which are held in the names of persons different from the platform operators. This makes it very difficult for investors to recover their monies when things go wrong. Online trading platforms may also require investors to pay for their trades or fund their trading accounts using credit or debit cards. This exposes investors to a further risk of unauthorised transactions on the credit or debit card. (Unregulated online trading platforms Infographic)
Mr Lee Boon Ngiap, Assistant Managing Director (Capital Markets), MAS, said:
There is no regulatory safeguard for investors who choose to transact on unregulated trading platforms. There is greater risk of fraud when investors transact on platforms operated by unregulated entities whose backgrounds and operations cannot be easily verified. Before committing to an investment, consumers should always ‘ASK, CHECK, CONFIRM’ to avoid any potential scams.
Mr David Chew Siong Tai, Director CAD, added:
Consumers should always be cautious when they come across an investment opportunity that promises high returns with assurances of little or no risks. These are likely to be a scam; if it is sounds too good to be true, it most probably is.