Fraud incidents from unlicensed online trading jumped 255% in 2017

Singapore's police and central bank issued a new warning against unregulated online trading.

The Commercial Affairs Department (CAD) of the Singapore Police Force and Monetary Authority of Singapore (MAS) launched a new public warning against dealing with unregulated online trading platforms.

CAD said it had 142 reports from consumers who lost a total of $7.8m from trading with these unlicensed platforms, up from 40 reports in 2016. The figure in 2017 is 255% higher than the figure in 2016.

"These unregulated trading platforms allow investors to trade a wide range of products, such as foreign exchange, shares, commodities and binary options," the two said.

CAD and MAS noted that 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.

"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," the two said.

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," the two added.

MAS capital markets assistant managing director Lee Boon Ngiap 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.”

CAD director David Chew Siong Tai added, “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 sounds too good to be true, it most probably is.”

Anyone with information on fraudulent activities taking place in an unlicensed online trading platform can come forward to submit information to the website of the Singapore Police Force or lodge a police report via the Electronic Police Centre or at any Neighbourhood Police Centre/Post.