BDSwiss Faces €100,000 Fine Over Regulatory Violations with Offshore Entities

The Cyprus Securities and Exchange Commission (CySEC) has fined BDSwiss Holding Ltd, a Cyprus Investment Firm (CIF), a hefty €100,000 for enabling offshore companies to mislead customers by referencing its CIF status. The hefty penalty comes after BDSwiss was found redirecting customers to offshore entities that were not regulated.

In 2021, FCA similarly banned the broker after a comprehensive investigation found UK clients were predominantly onboarded to groups regulated elsewhere.

The CySEC probe discovered that BDSwiss had allowed its offshore associates to capitalize on the CIF status to attract clients, offering them investment services in Contract for Differences (CFDs) without the necessary initial margin protection and requisite risk warnings. By doing so, the broker effectively circumvented the statutory requirements of a regulated CIF provider.

• The fine of €100,000 imposed on BDSwiss is for breaching Article 42 of Regulation (EU) 600/2014, as specified in Paragraph 5 of DI87-09, during the year 2021. The violation involves activities leading to the avoidance of the requirements of paragraph 4(1)(a) (initial margin) and (e) (risk warning) of DI87-09 by enabling offshore entities associated with BDSwiss to refer to the CIF status, without the necessary customer protections in place.

A similar course of events led to broker's ban in the UK in 2021. BDSwiss Holding and its associated brands were prohibited from operating in the UK after the FCA discovered investors were being offered high-risk CFDs using social media endorsements. The FCA concluded that BDSwiss Group had misrepresented the fact that one of its entities was regulated in the UK to lend an air of legitimacy to the group as a whole.

This misrepresentation misled investors to believe that all of the firm's activities were regulated by the FCA, whereas the reality was quite different. The overseas firms associated with BDSwiss did not adhere to the FCA's restrictions concerning the marketing and sale of CFDs to retail consumers.

The broker operates several brands regulated by various international entities, including Seychelles’ Financial Services Commission, the Cyprus Securities and Exchange Commission (CySEC), and the Financial Services Commission (FSC – Mauritius).