The Cyprus Securities and Exchange Commission (CySEC) has fined MCA Intelifunds, trading as FXORO, a total of €360,000 for multiple violations of the Cypriot investment laws.
This decision followed a September 2022 inspection that uncovered various compliance failures at the firm. CySEC has further explained that the settlement resolves allegations of non-compliance with several articles that cover multiple regulatory requirements, including conflicts of interest and information provided to clients.
The Cypriot watchdog provided a breakdown and specific details for the regulatory action, saying its decision was taken, based on possible violations of local regulations and for not acting honestly when approaching their clients. Further, the brand flagged for non-compliance with authorization conditions stated in many articles, which mainly concern the appropriateness of their products offered to certain client segments.
The breakdown of the fines includes €80,000 for lacking policies and procedures to comply with legal obligations, and €150,000 for not providing investment services to clients “in an honest, fair, and professional manner” that prioritizes their best interests. Additionally, the firm was fined €25,000 for not ensuring that CFDs and other instruments it offers were “appropriately distributed to the targeted market.”
Another penalty of €25,000 was specifically levied for MCA Intelifunds’ failure to assess whether the financial instruments offered were suitable for clients based on their needs, neglecting the interests of the target market. The company was also fined €60,000 for not collecting necessary information about clients’ investment knowledge and experience, which are required to determine if a product was suitable. Finally, a €20,000 fine was imposed for not warning clients when a product or service was considered inappropriate for them.
CySEC said earlier in February that q key focus of 2023 was the audit of promotional materials from over 35 CIFs. Where misleading content was identified, CIFs were directed to amend their promotional materials to ensure accuracy and fairness towards investors. The Market Surveillance department probed 6 CIFs, completed 42, and continued another 48 investigations by year’s end. One case was referred to the Attorney General to assess potential criminal offenses.
CySEC’s rigorous supervisory audits resulted in administrative sanctions totaling nearly €2.2 million in 2023, with a single CIF facing sanctions of €1 million. Over the last three years, the watchdog has imposed €6 million in sanctions, predominantly on CIFs for legislative breaches.
Additionally, over 103 instances required corrective measures from supervised entities, with 35 entities instructed to adopt specific actions within a given timeframe to comply fully with laws and directives on money laundering and terrorist financing prevention. Nineteen CIFs faced revocation or suspension of their operating licenses, and two cases involved the revocation of licenses for Collective Investment Undertakings.
