ASIC has taken action in the NSW Supreme Court to permanently shut down unlicensed foreign exchange (FX) business, Vault Market Pty Ltd (Vault Market), and to remove its sole director, Mr MD Anamul Amin, from the financial services industry.

This outcome continues ASIC's crackdown on the FX industry. ASIC has now taken action against five different individuals and/or entities in 2014. There are several more investigations on foot.

ASIC's investigation found that Mr Amin, of Wiley Park, New South Wales, was running an unlicensed FX business through a website with the domain name 'www.kiwifxbank.com'. The operation of the website was partly conducted from Bangladesh and had almost $1.1 million in funds from more than 800 investors. There were no Australian investors identified.

Justice Brereton found that from 1 July 2013 to 3 July 2014, Vault Market carried on a financial services business without holding an Australian financial services (AFS) licence and that it wrongly held out that it had an AFS licence.

In addition, the NSW Supreme Court found that Vault Market had engaged in misleading and deceptive conduct by publishing numerous statements on its website, including its Product Disclosure Statement, Financial Services Guide and Terms and Conditions, that:

• Vault Market was authorised by ASIC
• client funds would be placed into trust accounts
• a fictitious person, by the name of 'Alex Edward' was the Managing Director, and
• Vault Market was an Australian bank.

In declaring that Mr Amin was an officer of Vault Market when it contravened the law and failed to take reasonable steps to prevent the contravention, Justice Brereton said, 'Mr Amin's preparedness to facilitate the conduct of an unlicensed financial services business, and to participate in extensive misleading and deceptive conduct, manifests a need for protection of the public.'

Mr Amin was banned from providing financial services for eight years and from managing a corporation for five years. The website is permanently shut down.

During the proceedings, Mr Amin and Vault Market admitted to the contraventions.

ASIC Commissioner Greg Tanzer said, 'ASIC is concerned about the level of non-compliance with Australian regulatory requirements by a number of issuers in the margin FX industry.

'ASIC will continue to take action against entities and individuals who are not appropriately licensed to provide these services.'

Background

ASIC has recently taken the following action in relation to retail margin FX licensees:

• Pepperstone has agreed to cease providing financial services in Japan following inquiries by ASIC that revealed they were not licensed by the Japanese Financial Services Agency (refer: 14-267MR).
• Commencing proceedings in the Federal Court of Australia to stop Monarch FX, and its former director and general manager, Quinten Hunter, from carrying on a financial services business (refer: 14-266MR).
• Cancelling the Australian financial services (AFS) licence of an online FX broker after an investigation found it failed to comply with a number of its AFS licence obligations (refer: 14-226MR).
• Accepting an enforceable undertaking from an online FX broker operating managed discretionary accounts (refer: 14-036MR).

ASIC has also issued an alert cautioning Australian investors against dealing with the company or group YoutradeFX for trading in margin FX (refer: 14-036MR) and issued a more general warning to retail investors about the dangers of FX trading (refer: 13-283MR).

In relation to this investigation, ASIC received complaints that overseas users of the FOREX trading service had not received profits which they generated from trading with KiwiFx Bank.

On 1 July 2014, ASIC commenced action in the NSW Supreme Court to stop Vault Market and Mr Amin from carrying on a financial services business without an AFS licence through KiwiFx Bank. Through this website it appears clients conducted FX trading with the promise of ‘quick executions, low spreads, and intelligent customer-service’ (refer: 14-155MR).

ASIC continues to conduct a surveillance of the FX industry, and currently has several investigations into FX trading businesses on foot. ASIC also identified a number of websites that appear to have copied the KiwiFx Bank website and who do not hold an AFS licence.