International watchdogs, including Britain’s Financial Conduct Authority (FCA), have published warnings about Scottish shell companies, having concerns that consumers are losing “substantial sums of money” executing high-risk trades.
According to the results of Herald’s investigation, some binary options brokers and their websites are using Scottish limited partnerships (“SLPs”), which have already caused controversy about their purpose. They became popular in eastern Europe as zero-tax “offshore companies”, or other Scottish shell firms.
Watchdogs and the government have warned about SLPs. The latest allegations of unethical behavior underlined the need for action to make Scottish limited partnerships more transparent together with the imposition of penalties for illegitimate transactions.
All the binary options brokers, which were identified during the investigation, have links to Scottish shell companies, including three websites that were blacklisted by France’s financial regulator (AMF) recently.
AMF also warned that there is no authorised investment services provider for the sites Finpari, Barclays Traders and Solution-Capital.
Binary options trading websites have grown markedly across the globe over the last year. At least two more such sites were found to be trading under a front that is an SLP and there are growing international concerns over binary options trading sites cropping up on the world wide web, often with offshore tax haven addresses.
The FCA has stated that there is no law under which such businesses can be licensed as investment services in the UK. The watchdog said: “Unfortunately, many of the reports we have received are from consumers who have dealt with fraudulent binary options firms that have no regulatory status either with the FCA, Gambling Commission or other EEA or non-EEA regulators.”
“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.”
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