Foreign Currency and Exchange Fraud(3) from Henry Hardoon of hhassociates.co.uk

8/9/2019 Foreign Currency and Exchange Fraud(3) from Henry Hardoon of hhassociates.co.uk

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Paul Lower and Henry Hardoon 2010

FRAUD DETECTION & CONTROL

FOREIGN CURRENCY AND

EXCHANGE FRAUD


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FOREIGN CURRNECY AND EXCHANGE

FRAUD

Henry Hardoon ACA, FCCA, FAIA, CMC, APM, MIIT

Chartered Accountant & Chartered Management Consultant


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Currency trading scams often attract customers throughadvertisements in local newspapers, radio promotions orattractive Internet sites. These advertisements may tout high-return, low-risk investment opportunities in foreign currency

trading, or even highly-paid currency-trading employmentopportunities. The United States Commodity FuturesTrading Commission CFTC urges you to be skeptical whenpromoters of foreign currency trading claim that their servicesor account management will earn high profits with minimalrisks, or that employment as a currency trader will make you

wealthy quickly.

Foreign currency and exchange fraud

- Intro


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1. StayAwayFrom Opportunities That

SoundToo Goodto Be True

Get-rich-quick schemes, including those involving foreigncurrency trading, tend to be frauds.

Always remember that there is no such thing as a "free lunch."Be especially cautious if you have acquired a large sum ofcash recently and are looking for a safe investment vehicle. In

particular, retirees with access to their retirement funds may beattractive targets for fraudulent operators. Getting your moneyback once it is gone can be difficult or impossible.

currency and exchange fraud

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StayAwayFrom Companies That

Promise LittleorNo FinancialRisk

Be suspicious of companies that downplay risks or state that

written risk disclosure statements are routine formalitiesimposed by the government.


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cont

The currency futures and options markets are volatile andcontain substantial risks for unsophisticated customers. Thecurrency futures and options markets are not the place to putany funds that you cannot afford to lose. For example,retirement funds should not be used for currency trading.


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cont

You can lose most or all of those funds very quickly tradingforeign currency futures or options contracts. Therefore,beware of companies that say:

"With a $10,000 deposit, the maximum you can lose is $200 to

$250 per day."

"We promise to recover any losses you have."

"Your investment is secure."


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4. Don'tTradeon Margin Unless You

UnderstandWhatItMeans

Margin trading can make you responsible for losses

that greatly exceedthe dollar amount you deposited.

Many currency traders ask customers to give them money,which they sometimes refer to as "margin," often sums in therange of $1,000 to $5,000.


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4. Don'tTradeon Margin Unless You

UnderstandWhatItMeanscont..

However, those amounts, which are relatively small in the

currency markets, actually control far larger dollar amounts oftrading, a fact that often is poorly explained to customers.Don't trade on margin unless you fully understand what youare doing and are prepared to accept losses that exceed themargin amounts you paid.


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5. Question Firms ThatClaim To Tradein

the "InterbankMarket"

Be wary of firms that claim that you can or should trade in the

"interbank market," or that they will do so on your behalf.


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5. Question Firms ThatClaim To Tradein

the "InterbankMarket

Unregulated, fraudulent currency trading firms often tell retail

customers that their funds are traded in the "interbank market,"where good prices can be obtained. Firms that tradecurrencies in the interbank market, however, are most likely tobe banks, investment banks and large corporations, since theterm "interbank market" refers simply to a loose network of

currency transactions negotiated between financial institutionsand other large companies.


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6. Be WaryofSendingorTransferring

Cash ontheInternet, ByMailor

Otherwise

Be especially alert to the dangers of trading on-line; it is veryeasy to transfer funds on-line, but often can be impossible toget a refund.


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Otherwisecont

It costs an Internet advertiser just pennies per day to reach apotential audience of millions of persons, and phony currencytrading firms have seized upon the Internet as an inexpensiveand effective way of reaching a large pool of potential

customers.


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Otherwisecont

Many companies offering currency trading on-line are notlocated within the United States and may not display anaddress or any other information identifying their nationality ontheir Web site. Be aware that if you transfer funds to thoseforeign firms, it may be very difficult or impossible to recover

your funds.


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8. Be Sure YouGetthe Company's

Performance TrackRecordcont

While firms and individuals are not required to provide this

information, you should be wary of any person who is notwilling to do so or who provides you with incompleteinformation. However, keep in mind, even if you do receive aglossy brochure or sophisticated-looking charts, that theinformation they contain might be false.


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9. Don'tDealWith Anyone Who Won't

Give YouTheirBackground

Plan to do a lot of checking of any information you receive to

be sure that the company is and does exactly what it says.


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9. Don'tDealWith Anyone Who Won't

Give YouTheirBackgroundcont

Get the background of the persons running or promoting the

company, if possible. Do not rely solely on oral statements orpromises from the firm's employees. Ask for all information inwriting. If you cannot satisfy yourself that the persons withwhom you are dealing are completely legitimate and above-board, the wisest course of action is to avoid trading foreign

currencies through those companies.


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10. Finalthoughts

Avoid any company that predicts or guarantees large profitswith little or no financial risk.

Be wary of high-pressure tactics to convince you to send ortransfer cash immediately to the firm, via overnight deliverycompanies, the internet, by mail, or otherwise.

Be skeptical about unsolicited phone calls about investments

from offshore salespersons or companies with which you areunfamiliar.


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Thank you !Thank you !

Documents

Foreign Currency and Exchange Fraud(3) from Henry Hardoon of hhassociates.co.uk