The Central Bank of Kenya (CBK) on Tuesday, August 25, issued a warning to Kenyans over fraudulent online forex traders and unlicensed financial schemes that could cost Kenyans money.
In a statement, the CBK together with other financial regulatory bodies – Retirements Benefits Authority (RBA), Insurance Regulatory Authority (IRA), Capital Markets Authority (CMA), Sacco Societies Regulatory Authority – warned against engaging with online pyramid schemes, unlicensed credit and savings schemes, and unlicensed online forex brokers and traders.
“These entities promise customers huge returns and are not licensed as required, either as online forex brokers or traders by the Capital Markets Authority (CMA) or as forex brokerage and trading, and other capital markets products while CBK licenses and regulates all forex traders and the Kenya Shilling component of any online forex trading and brokerage.
“These rogue entities seek to exploit Kenyans and pose money laundering and financing of Terrorism risks to the financial sector,” the notice read in part.
The regulators also drew attention to online global networking companies that seek to recruit members of the public to join and make cash deposits purportedly buy shares in the company.
“The encouragement to recruit new members in order to receive more benefits is a characteristic of a fraudulent pyramid scheme,” the agencies noted.
They urged the public to deal with licensed financial institutions and entities in order to protect themselves from being defrauded and losing their money.
Forex is a combination of foreign currency and exchange. The foreign exchange, otherwise known as FX, is a worldwide marketplace for exchanging national currencies against one another. It is the largest, and also the most liquid, market in the world.
The online trading companies are regulated by the CMA but it does not regulate individual traders. One can start with as low as Ksh100 to trade
To start forex trading in Kenya, one needs to open a trading account with an online forex broker.
The regulators warned that appropriate action would be taken against unlicensed entities involved in the provision of fraudulent or unlawful financial services and unlicensed forex dealers.
“Members of the public should, therefore, report individuals and entities offering unlicensed or fraudulent services,” the notice advised.
