CySEC Punishes Broker for InfractionsBy Lex Yaranu | Friday, August 28th, 2015
As the binary options market deepens with more stringent measures applied by regulators for market infractions, traders will get to see more news about which brokers are in right standing and which ones are not.
On August 3, 2015, the Cyprus Securities and Exchange Commissions (CySEC) which acts as the regulatory watchdog for the binary options market in Cyprus, released a statement concerning a decision it had reached on several complaints about the activities of Banc de Binary. Banc de Binary was fined 22,000 Euros for contravening sections of the Prevention and Suppresion of Money Laundering and Terrorist Financing Law DI144-2007-08 of 2012. This law was passed by the Cypriot government to prevent the use of the Cypriot financial system as a conduit for terrorist financing and money laundering. As part of the requirements of brokers to qualify as CIF which can operate as binary options brokers in Cyprus. clients of brokerage firms are required to make certain disclosures as to the source of funds to be used for binary options trading, in addition to fulfilling Know Your Customer (KYC) requirement of submitting a government issued ID and a proof of residence document.
The finding though is that not all brokers follow these rules strictly. There is a lot of competition for clients as the number of brokerage houses offering European-style binary options has increased dramatically in the last two years. Some firms may therefore not follow the laid down procedures of identifying customers and their means of income before allowing them to operate binary options accounts.
By coming out to sanction Banc de Binary, CySEC has made yet another statement in its quest to ensure that the binary options marketplace in Cyprus is sanitized and that brokers operating with its license comply with the laws of the land.
This is not the first time that Banc de Binary is finding itself at odds with a regulator. In 2014, it had issues with the Commodities and Futures Trading Commission (CFTC) which regulates binary options in the US. The CFTC accused the company of illegally soliciting US clients. In the US, it is illegal for companies that operate outside of the CFTC’s jurisdiction to solicit and operate binary options accounts for US citizens and residents.
For now, Banc de Binary is still able to conduct binary options brokerage business as its license was not suspended by CySEC. It is therefore still open for buisiness but new clients can expect a much tougher account opening regime by this broker.Published in News & Analysis