Singapore authorities highlight sharp spike in online trading fraud

Singapore’s law enforcement and financial industry regulator have issued an alert about rising fraud incidents involving online trading platforms.

Commercial Affairs Department CAD, which operates under the Singapore Police Force, and Monetary ity of Singapore MAS said 142 reports were filed last year from consumers who lost S$7.8 million US$5.83 million trading on unlicensed online sites. In comparison, 40 such reports were recorded in 2016.

The unregulated trading platforms offered various products including foreign exchange, commodities, and binary options, they said, noting that these sites typically were based outside Singapore. This made it tougher for affected consumers to pursue claims against such operators.

Furthermore, investors often would have to transfer funds to overseas bank accounts held under names that were different from those operating the trading platforms. poker indonesia In addition, some would instruct investors to pay for their trades or fund their trading accounts using credit or debit cards, which could potentially lead to unauthorised transactions made on these cards.

These trading sites were not licensed or regulated under Singapore’s Securities and Futures Act, which outlined rules licensees would have to observe and that were put in place to protect consumer interests, such as disclosure requirements on investment products.

MAS’s assistant managing director for capital markets, Lee Boon Ngiap, said: “There is no regulatory safeguard for investors who choose to transact on unregulated trading platforms…operated by unregulated entities whose backgrounds and operations cannot be easily verified.”

He advised consumers to check and verify the site’s credentials before proceeding with the trade.

CAD’s director David Chew Siong Tai warned consumers against investment opportunities that promised high returns with assurances of little or no risks. “These are likely to be a scam; if it is sounds too good to be true, it most probably is,” Chew said.

1. Price fluctuation risk

This is a common risk involved in commodity trading online. Most investors are not able to predict future prices of commodities. This is because price fluctuation depend on several factors which include political instability, weather conditions among many others. In addition to that, sudden fall in exchange rate of a particular currency can result to huge financial loss to the trader. Price of commodities are usually based on demand and supply. It is therefore very difficult to accurately predict how the price will move in future.

2. Speculative risk

When investing in commodities, traders are usually exposed to speculative risks. This is because traders are not 100% certain on whether they will make profits or losses from their investments. Commodities with high volatility have higher speculative risk because any slight change can result to huge profits or losses.

3. Geological risks

The fact is that natural resources can only be found in certain parts of the world. This means that traders that are working with companies that are extracting this natural resources have deal with the risk involved in working with government. To gain access to these resources, there are many conditions that must be met including tax obligation, licensing, working with indigenous employees, environmental concerns among many others. All these important factors can be changed depending on political decision made. As a result, commodity traders need to monitor political climate on regular basis to see if it is favorable to them.

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