In the era of forex trading, numerous platforms are known to be scams that are after people’s hard-earned money. And lately, retail brokers have been growing at a worldwide scale, finding Africa as a land of new opportunities because American and European markets are somewhat saturated.
However, scammers are also migrating and trespassing borders and a particular African country has raised its voice to increase awareness in the community. Kenya’s financial watchdog is warning traders and investors against FX scams, prompting them not to perform trading operations with unregulated platforms
Dealing Only With Licensed Platforms
According to the African country’s highest financial authority (the Central Bank of Kenya, or CBK) people in the nation should only trade and engage into FX-related affairs with genuine and properly licensed institutions and entities.
The CBK also stated that now, people in the community have been advised to do their due diligence before trading and confirming the licensing situation of FX dealers, data that is present on the CBK web page. Traders that don’t do this are at risk of being defrauded and losing their funds in scams.
In a different subject, but regarding the same theme, the CBK also explained that unregulated broker platforms usually advertise their services in social media channels and also via mass emails.
In addition, the financial regulator of the emerging African country also observed that FX brokers are influencing traders to use their services and offerings through different applications. They are, essentially, using every channel that has become mainstream: apps, mobile devices, and social media, in an effort to “recruit” innocent and vulnerable people.
It could also mean, however, that most of these platforms haven’t been able to secure a license because they aren’t actually in the country. It is very rare for scam brokers to have their own software.
A Common Practice in Recent Times
For instance, numerous European-regulated platforms are now shifting their efforts and focus in another African emerging market: Nigeria. Many of them haven’t secured a license from local regulators.
While numerous illegitimate websites claim that there are no regulations currently in place in the Kenyan retail trading industry, that is not true, as the CBK acts as the financial watchdog. The fact that Equiti Group got a license from local regulators just a few months ago and later launched a broker, is the perfect example of that.