Investigation Reveals Binary Options Sites Hiding Behind Shell Corporations

FCA warns against unregulated binary options sites.

Punters warned to be vigilant after investigation shows binary options sites could be hiding behind shell corporations. 9Image:

Binary options betting sites using Scottish shell corporations have come under fire from the Financial Conduct Authority (FCA).

Tracking the rise of binary options platforms across the UK, the FCA has issued a warning that customers are losing large sums of money on these unregulated betting sites.

Binary options basically allow punters to speculate on the financial markets. For example, an operator might offer a bet on the fact that the FTSE will end the day higher than it started.

If people believe this will be the case they can “buy” or back the bet. If they think it won’t happen they can “sell” or bet against the proposition.

Punters Beware of Unregulated Betting Sites

Although some describe this practice as different from traditional sports betting, many of the variables are the same and that’s led to it receiving bad press over the last decade.

Following the FCA’s warning about these sites, The Herald launched an investigation into the industry. Reviewing many of the sites apparently based in Scotland, the Scottish newspaper found that many of the websites are trading as shell firms.

Known technically as Scottish Limited Partnerships (SLPs), these shell organisations are essentially acting as a front for unregulated operators. During the course of its investigation, The Herald found that many of the sites are blacklisted by France’s financial regulator.

Not only that, but the fact they are registered as SLPs means they are likely paying zero tax on revenue generated.

Given the potentially spurious nature of the sites and where they are really based, the FCA is warning consumers to steer clear of them.

“Fraudulent firms operating in the binary options market without the necessary authorisations or licenses tend to be based outside the UK yet often claiming to have some kind of presence here, often at prestigious City of London addresses,” read the FCA’s official warning.

Self-Exclusion Set to become Easier

In other UK gambling news this week, the Remote Gambling Association (RGA) has partnered with KMPG to help shape the National Online Self-Exclusion Scheme (NOSES).

NOSES is designed to make the process of self-exclusion easier by turning it into a one-stop-shop.

Although the RGA is still piecing the puzzle together, the aim is to give players a way to exclude themselves from all sites licensed by the Gambling Commission with a single click.

The innovation is part of a larger movement that aims to improve responsible gaming features across the UK’s network of regulated sites.

Working with KPMG, the RGA hopes to have the new system, as well as a selection of additional provisions, in place by the end of 2017.

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