Forex Trading: Why Avoid IFSC Brokers from Belize

December 20, 2018 at 01:06 PM

IFSC Belize Regulator

Formed: January 1, 1999

Jurisdiction: Belize

Headquarters: Belize City

Website: www.ifsc.gov.bz

IFSC is responsible for licensing of the following:

  • International Business Companies (IBCs)
  • International Asset Protection and Management
  • Brokerage, Consultancy and Advisory Services in any financial services
  • Trading in Foreign Exchange, Financial Commodity-Based Derivatives and Other Securities
  • Money Transmission Services
  • Payment Processing Services
  • Money Brokering
  • Money Lending and Pawning
  • Money Exchange
  • Safe Custody Services

Introduction

The financial services sector of Belize, in particular, international Forex and trading services companies, is a relative newcomer within the financial industry, yet recently expanded Belize economy to a world-recognized hub.

Belize as an English-speaking country in the heart of Central America obtained its independence in 1981 and since then approaches to diversify its portfolio through various opportunities to international investors and for instance included an attractive offering to firms operating financial services. Belize possibility, which is based on the offshore concept allows investors to engage in a variety of activities, obtain official status, run brokerage accounts, operate trading service, commission arrangements and other commercial transactions. Belize is also an active member of the Caribbean Financial Action Task Force (CFATF) that subscribes to its core principles to eradicate money laundering and to foster stability in the global financial system.

While developing and through its enlargement of potential, many online forex brokers used a Belizean IBC as a perfect opportunity to run international brokerage service and make authorized financial transactions. Therefore, through its growing demand and necessity, Belize established independent local authority with a purpose to carry out financial regulation responsibilities including licensing of financial market participants and exchanges, and the supervision of their activities itself. The International Financial Service Commission or IFSC Belize started its operation in 1999 as a government agency to protect the reputation of Belize as an offshore financial center.

IFSC being a self-regulatory body operates through a set of international rules is in charge of licensing of all international financial service providers through a set of requirements that designed to ensure compliance with international best practices. The scope of responsibilities includes promotion and protection of Belize as it became an important international financial center, through regulation and supervision of international financial service providers. In addition, IFSC powered to impose administrative sanctions and disciplinary penalties for a brokerage or investment firms that come under the relevant Belize financial acts.

https://www.ifsc.gov.bz/about-ifsc/

Why not trade with an IFSC registered broker?

Belize as a gorgeous tourist destination, while also is tax heaven with a zero tax structure that established its own regulation for financial investment and Forex firms licensing due to high demand and necessity of regulation. Ever since Belize became a known offshore zone and Forex hub, as destination attracted thousands of brokerages seeking for an opportunity to be legitimate firm, yet to skip complicated and costly establish procedures.

Therefore, development of perfect business environment attracted numerous enthusiasts and made Belize as an investor-friendly economy that enables business growth, however those firms and individuals that are seeking for an opportunity to enable easy fraud process were allured as well. Definitely, it’s a very profitable chance to open brokerage firm in a destination that saving establishment costs and allows to enjoy almost unlimited profits.

So getting back to the point, why an offshore broker or investment firm is not a recommended option to any trader, let us look closed what are the requirements to become a licensed IFSC company. First of all the firm should maintain its minimum operating capital depending on the service from $10,000 to $100,000, then to pay international financial service provider fee of $1,000 only! The annual license fee varies on various kinds of financial services that also include Forex, trading securities, derivatives, and financial instruments, while a fee is either $2,500, $5,000, $25,000.

Yet, if to compare to reputable regulatory supervision, these rates are extremely low, while the costs of setting up considered to be one of the lowest worldwide. Meaning, the company is not able to operate or guarantee the safest trading environment with such a lack of capital, even more, brings uncertainty to brokers performance. Moreover, there is no strict requirement for a company to segregate clients funds from the company ones, a meaning broker can use trader’s investment for their own purposes, like heavy advertising as an example. The broker is not either shall establish a physical branch or office in a destination, while the directors and management would be only slightly checked in terms of their proficiency.

In regards to audit and control of how the Forex broker or company operates, the IFSC does not implement comprehensive reporting demand, so the company can easily hide its true nature of performance.

Although IFSC makes its best to regulate and restrict firms by impose of fines, most of IFSC brokers getting out of unlikely situation quite easy, as fewer standards allow to enjoy almost free operation in financial markets.

In comparison to trusted authorities in the EU, the US or other jurisdictions, the regulated broker catered and demanded to detail commitment in regards to trader protection, while IFSC companies still operate with an environment sufficiently to fraudulent activities.

Complaints and scams

While the main duties of the IFSC, concerns about the provision of effective services and registration of international companies, the authorization process and accepts complaints from foreign traders. The trader should firstly contact his service provider and try to resolve an issue through the company, yet in case you are not satisfied with the handling result to move further and contact the authority. The transfer of the complaint to IFSC should include detailed data with information on the company complaining, as well as evidence documentation.

Submit a complaint by the contact email: complaints@ifsc.gov.bz

Based on the findings, IFSC may impose a statement to the company with a requirement of compensation. The IFSC is not responsible for further compensation, therefore quite often the dishonest brokers disappeared or didn’t take stated action, as the authority can do nothing about it. Means, the trader will remain on his own to resolve issue further and can only submit a case to the court for appeal.

The IFSC adheres to promote the development of the Belize financial service industry and due to numerous frauds and high activity of scams specifically from an offshore zone, the authority submits from time to time warnings against slippery brokerages and other protective information. To alert the public and financial sector whether such an offering appears in the market IFSC post notice that includes only those firms that are not registered under the IFSC or obviously false certification or licenses. Means the authority didn’t check on the firm before it establishes and can’t support by any data how they operate. However, due to the lack of Belize regulation requirements itself, and its set of standards which is unfortunately very far comparing to the trusted industry regulators, the statements rather not convincing and effectiveness remains questionable.

IFSC Warning Notices: https://www.ifsc.gov.bz/category/warning-notices/

List of Belize Forex Brokers:

About 50 Belize Forex Brokers were reviewed by us, in fact, most of them appeared in the list of Brokers to avoid as the implemented safety measures do not allow us to trust them. Thus we do not recommend trading with them and advise to consider only those that hold additional licenses or regulated by trusted jurisdictions.

The lists of IFSC licensed service providers are regularly updated through an official website and available for verification at all times.

“Investors and other users are warned not to deal with any entity whose name does not appear on the list for the service or business in question. It should also be noted that under the laws of Belize, a separate license is required for each kind of service or activity.”

https://www.ifsc.gov.bz/licensed-service-providers/

Conclusion:

Forex trading witnessed thousands of scams and numerous malpractices that were taken by unethical brokers, while in fact the majority of them indeed located in an offshore zone and known heavens with zero taxes. The most dishonest ones always seeking the easiest way to establish allegedly legal firm, through a license that does not implement a strict regulation or reporting. The fraudulent activities carried out in a most sophisticated way while it’s been hard to detect from where the offering coming from. Therefore, traders should always be aware of these firms that corrupted an image of Forex trading and trust to only well-regulated brokers incorporated and heavily regulated by the known authorities like UK’s FCA, Australian ASIC and similar.

Considering the fact that IFSC has not implemented the strictest standardization that may guarantee trustable provision of Forex or trading service delivery, we do not recommend choosing among IFSC companies. Although, a newly implemented increase of the capital requirement definitely assists in a further decrease of new suspicious brokerages establish and those firms that seeking for an easy solution to skip regulation. However, currently, there are international brokers that do hold multiple licenses, including IFSC one and are regulated by other jurisdictions, which allows them to deliver an excellent environment for trading. Therefore, you should choose a broker and forex trading provider among existing testimonials and consider only those that are regulated. Check out our recent articles about ASIC, FCA or other authorities to see the difference between the implemented regulations.

6 responses to “Forex Trading: Why Avoid IFSC Brokers from Belize”

  1. Hello, Ok kindly wish to know if the Crypto company- Royal Crypto Investment is regulated by your company.

  2. Been scammed by global trade atf operated by bayline trading. Wanted me to deposit more and more and lost everything. My question to all banks. Why do they allow fraudulent businessesin Berlize to have a registered bank account. The banks should also be the ones trying to keep these guys out to protect clients

  3. I have been scammed by InvestMarkets.com broker company licensed by IFSC from Belize”, I lost in one week ogmf joining them and doing their broker’s instructionson their robot trade system lost alot of money, they force you to deposit more and more… please advice me what to do .
    Wrote to their support team, no reply , which I am not surprised about.
    Please advice me what I can do to recover my money, meanwhile they continue cheating more and more people.

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