South Africa’s financial regulator withdrew the
license for the online trading platform Banxso. Financial Sector Conduct
Authority (FSCA) cited concerns regarding the firm’s operational practices and
potential risks posed to clients.
The FSCA mentioned today (Wednesday) that Banxso’s license was withdrawn due to findings suggesting that the company
could be engaging in practices posing risks to clients. The authority’s concerns include the firm’s alleged
association with misleading deepfake advertisements and aggressive sales
tactics employed by its agents.
Regulatory Actions
These tactics reportedly pressure clients into making
hasty decisions without the necessary risk and need analysis. The FSCA noted
that such actions breach regulatory guidelines and raise ethical questions
about client treatment.
The provisional nature of the withdrawal indicates
that the FSCA is still assessing the situation, allowing Banxso an opportunity
to respond and possibly overturn the decision once the investigation concludes.
“The FSCA has taken this step because it is concerned that
there may be a risk of harm to clients and/or the general public if Banxso
continues its operations as a financial services provider,” the regulator mentioned.
“The provisional withdrawal is based on preliminary
investigation findings regarding the activities of Banxso and its possible
association with the Immediate Matrix deepfake advertisements. Once the
investigation is finalized, the FSCA will consider the investigation and any
submissions by Banxso.”
In response to the ongoing investigation, the FSCA
escalated its actions by notifying the Financial Intelligence Centre (FIC). On
October 2, 2024, the FIC intervened by placing a hold on seven of Banxso’s bank
accounts, citing concerns over potential financial misconduct.
Banxso Fights Back
Banxso challenged this step in the Western Cape High
Court, seeking to lift the restrictions. However, on October 8, the court ruled against the firm, maintaining the hold on the accounts.
In a further development, the Asset Forfeiture Unit of
the National Prosecuting Authority (NPA) became involved. On October 14, 2024,
the NPA secured a preservation order for the funds in Banxso’s accounts,
emphasizing the seriousness of the situation and the potential for legal
repercussions.
Banxso still holds other licenses in various jurisdictions. The FX/CFD brokerage company obtained an Investment Dealer license from Mauritius’s Financial Services Commission early this year. The license enables Banxso to offer a range of financial products and services to its international clientele in compliance with Mauritius’ regulatory guidelines.
This article was written by Jared Kirui at www.financemagnates.com.
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