Economy

CMA cracks down on 40 unlicensed forex traders

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The Central Bank of Kenya offices in Nairobi. FILE PHOTO | NMG

The markets regulator has cracked down on 40 online forex traders operating without a licence in a bid to protect investors from possible fraud on the Internet.

The Capital Market Authority (CMA) says it has issued cease and desist orders to the firms that hide behind web-based platforms to lure unsuspecting individuals to the online scams.

The CMA has also issued a joint notice with the Central Bank of Kenya warning Kenyans from dealing with unlicensed online money traders as digital tools make it difficult to catch the firms most of which operate from foreign countries.

Kenya investors have been sending money to offshore accounts for buying and selling currencies, shares, commodities and metals like gold online, but the firms fail to wire back the proceeds when they want to cash out.

“We have issued cease and desist orders to over forty unlicensed entities operating without a license as required under the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017. Since the entities are not licensed we do not have information on the sums of money involved,” the CMA said in an emailed response.

CMA has licensed four non-dealing online foreign exchange brokers namely; EGM Securities Ltd (trading as FXPesa), SCFM Ltd (trading as Scope Markets), Pepperstone Markets Kenya Limited, and Exinity Capital East Africa Limited.

Standard Investment Bank (SIB) was licensed as Kenya’s first money manager, stock allowing its to trade offshore on global indices, currencies and commodities.

Kenya does not block sites used by the foreign players but notifies advertisers not to market their products and payment service providers not to accept to be used as conduits to send money abroad.


Scope Markets Ceo Kenneth Waiganjo, says unlike foreign based players those registered to operate in Kenya have physical offices and a flexible way to withdraw client cash. They also operate in line with Central Bank Rules on know your customer to avoid money laundering.

“Many Kenyans used to open accounts with the online unregulated players, trade and make money then withdraw and wait, but the money never came,” Mr Waiganjo said.

The growth of internet connectivity has opened up new spaces for investments globally including online foreign exchange, global stocks markets, indices and offshore commodities and metals.

However the challenge has been getting a trusted broker who they can physically locate and report to the regulator if they get cheated.

Kenya has had a history of losing money to online forex traders who collect money and disappear without a trace.

The online forex trading firm VIP Portal owned by Alfred Wangai and his wife Mercy Nkatha started out in Limuru in 2013 and within one year, it had received over Sh1 billion from farmers and Limuru residents looking to improve their fortunes.

CMA has also clamped down on Interweb Global Fortune limited that operated from the 14th floor of view park towers and its boss Manases Kuria was charged with operating a regulated business without a licence.