MAS, CAD flag fraud in unregulated online trading platforms

More people are losing money trading on unregulated online platforms.

In a joint statement yesterday, the Commercial Affairs Department (CAD) and Monetary Authority of Singapore (MAS) advised the public to exercise extreme caution when dealing with unregulated online trading platforms.

The CAD and MAS have received an increasing number of complaints involving losses from unregulated online trading platforms over the past year, the statement said. These unregulated trading platforms allow investors to trade a wide range of products, such as foreign exchange, shares, commodities and binary options. Last year, the CAD received 142 reports from consumers who lost a total of $7.8 million from trading with these unlicensed platforms, up from 40 reports in 2016.

Unlicensed platforms engage consumers via online advertisements, unsolicited phone calls, e-mails or messaging apps. In some instances, events or seminars are conducted to promote the platform. Existing customers are also offered commissions to entice new customers to trade on the platforms.

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, it said. "Investors will also face challenges in pursuing claims against operators based overseas."

Investors are often instructed by operators of unregulated 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," it said.

  • $7.8m Total amount that consumers lost last year from trading with unlicensed online platforms, based on the 142 reports the CAD received.

"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," MAS assistant managing director (capital markets) Lee Boon Ngiap said.

"Before committing to an investment, consumers should always 'Ask, Check, Confirm' to avoid any potential scams," he said.

A version of this article appeared in the print edition of The Straits Times on June 01, 2018, with the headline 'MAS, CAD flag fraud in unregulated online trading platforms'. Print Edition | Subscribe