Singapore, 31 May 2018
The Commercial Affairs Department (CAD) of the Singapore Police Force and Monetary Authority of Singapore (MAS) advise the public to exercise extreme caution when dealing with unregulated online trading platforms.
2 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
3 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
4 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. (Refer to infographic in Annex)
5 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.”
6 Mr David Chew Siong Tai, Director CAD, said, “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.”
7 Anyone with information on fraudulent activities taking place in unlicensed online trading platform can come forward to submit information online at www.police.gov.sg/iwitness, or lodge a Police report via the Electronic Police Centre at www.police.gov.sg/e-services or at any Neighbourhood Police Centre/Post.
|The call for consumers to always ASK, CHECK and CONFIRM before committing to an investment was central to the “Beware! Investment Scams” campaign, jointly launched by MoneySENSE and the Securities Investors Association (Singapore) in April 2017. The campaign aimed to caution consumers to be alert to investment scams and heighten awareness of the steps consumers should take to perform checks on all investment opportunities before they invest.ASK|
ASK as many questions as you need to fully understand the investment opportunity. If the company is unable to, or avoids answering any of your questions, be wary!CHECK
CHECK on the company, its owners, directors and management members to assess if the opportunity is genuineCONFIRM
CONFIRM the company’s and representatives’ credentials by using available resources, including the Financial Institutions Directory, Register of Representatives and Investor Alert List on the MAS’ website (www.mas.gov.sg).
What are unlicensed online trading platforms?
MAS licenses certain online trading platforms that offer investment products that are regulated under the Securities and Futures Act (SFA). These products include shares, debentures, futures and exchange-traded funds. Trading platforms that are licensed by MAS adhere to regulatory safeguards such as disclosure requirements on investment products that are offered to consumers. Regulated platforms are also subjected to conduct rules, to ensure that they deal fairly with their customers. Such safeguards protect investors’ monies and assets when they are dealing with financial institutions.
Some online trading platforms are operated by entities which are neither licensed nor regulated by MAS. These unlicensed platforms engage consumers via online advertisements, unsolicited phone calls, emails or messaging apps. In some instances, events or seminars are conducted to promote the platform. Existing customers are also offered commission to entice new customers to trade on the platforms.