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A number of investment schemes that involve trading in the foreign exchange market, also known as the forex market, used by traders, brokers, and financial institutions have been deemed by lawmakers to put the stability of the market at risk. In some cases, these trading schemes are deemed fraudulent, attracting criminal liability for those that use and operate them.

When trading in the foreign exchange market, it is essential for traders to understand the potential risks and liabilities that can arise from trading activities. All traders should be aware of the legal implications of their activities, as well as the potential penalties that can result from any illegal activity.

The law in this area has been designed to be fairly comprehensive, allowing regulators to spot questionable activities as early as possible.

It is therefore important that anyone who operates in this field be aware of the risks and take steps to ensure that their activities are compliant with all relevant laws and regulations.

If you are concerned that your activities may expose you to legal action, it is important to act quickly and that you seek the advice of expert solicitors as soon as possible.

What is Forex Trading Fraud?

Also known as Forex Trading Fraud, this type of currency exchange scam is a financial crime that involves deceiving investors, manipulating the market, or using false advertising or information to trick people and take advantage of unsuspecting investors.

Such a scam aims to defraud currency traders by convincing them that they can expect to gain a high profit by trading in the forex market. It can involve anything from fraudulent trading practices to false statements made by brokers or traders in order to induce people into investing their money.

It is important for investors and brokers to be aware of the potential risks associated with trading and investments in the forex market, to be aware of their obligations under the law, and do their due diligence before investing any money.

Any breach under the law could result in civil and criminal penalties, which you can read more about in the sections below.

If you have questions about financial crime, currency trading, forex companies, forex scams, regulations surrounding forex scams, or if you are concerned you may be exposed to legal action involving exchange of currency in the forex market, please act quickly and contact our experienced Financial Crime lawyers today for expert help.

Is it illegal to exchange currency for profit?

It is not illegal to exchange currency for profit in most countries around the world. However, it is important for traders to note that different countries have their own laws and regulations regarding currency exchange and it is essential that any trade or transaction made is completed in accordance with all applicable laws and regulations.

It is always important to research and understand the laws and regulations of any country before engaging in any kind of currency exchange activities.

Contact our experienced lawyers today for expert advice and information about forex trading laws, financial crime, trade regulations, and more.

Who Regulates Forex Fraud?

Forex trading scams as an illegal enterprise has been the subject of increasing regulation. A number of agencies work in partnership and pool their resources to maintain confidence in, and the stability of trade in, the Forex market:

  • The Financial Conduct Authority (FCA) is responsible for the regulation of financial services and other types of companies that have an obligation to prevent fraud.  
  • The Serious Fraud Office (SFO) is responsible for investigating and prosecuting the most serious allegations of fraud, including forex trading scams.

Both of these organisations may work with other agencies, both domestic and international, to prevent abuse of the forex market.

The Powers of the FCA and SFO

The powers of both the FCA and the SFO are quite broad, and each organisation will exercise these powers differently depending on the circumstances.

The FCA is granted an array of powers to prevent any form of market abuse, e.g. forex scams.  Technically the FCA is entitled to take any action necessary to prevent market abuse and this can include recovering documents and conducting interviews with individuals to establish the existence of market abuse.

The SFO, should it deem it necessary to investigate allegations of forex trading fraud, is entitled to ask that it be provided with information e.g. reports, paperwork or ask that someone attend an interview with them to answer questions surrounding allegations.

Should either the FCA or the SFO find evidence of fraud or forex scam, both organisations are empowered to prosecute individuals, companies or businesses that are found to have been involved in forex scams or activity that is fraudulent.

Forex Fraud Offences

There are several different offences that are related to forex fraud. The most important of these are set down in two different pieces of legislation:

The Fraud Act 2006

This piece of legislation contains a general offence for fraud, which involves making a personal gain or causing, or exposing another to the risk of, loss, which is committed by:

  • making a false representation;
  • failing to disclose information when under a duty to do so; or
  • dishonestly abusing a position of trust that involves the financial interests of another.

Even in the context of trading in forex currencies, if you are discovered to having taken any of the actions listed above, you will be vulnerable to legal action and it is important that you do your due diligence and seek expert legal advice.

If you are concerned or have any questions relating to forex trading, forex frauds or money scams, contact our expert Financial Crime lawyers today.

The Theft Act 1968

Under this Act it is an offence to dishonestly do any of the following, in an attempt to make a gain or cause someone else to suffer a loss:

  • Destroy, conceal or falsify any kind of documents that are needed for accounting purposes; or
  • Use false or misleading financial information when providing someone with information.

Activities related to forex trading will ultimately involve the provision of some kind of financial information, that will have to have been collated properly. Any attempt to interfere with this information could expose you to legal action under the Act.

The important point to keep in mind is that forex fraud is regulated under these two different kinds of legislation in the hope that this will deter any would-be participation in carrying it out. 

The ability for prosecutions to be mounted on evidence of a number of different activities makes the crime easier to prosecute - which is one of the reasons why it is very important to be mindful of your activities if operating in such trading.

Contact us today for information.

Forex Fraud Penalties

Trading fraud of foreign currency can attract either civil and/or criminal penalties, depending on the basis that the crime is prosecuted:

Civil Penalties

These will be issued following an investigation by the regulatory authorities, the FCA or the SFO, of the activities of either an individual or an organisation.

The FCA is empowered to issue substantial fines on evidence of fraud, and in some circumstances will be able to stop an individual or organisation from carrying out trading activities.

The SFO, on the other hand, is entitled to recover any monies or lost funds that are the result of fraudulent activity - whether or not there is a criminal conviction.

It is also important to be aware that there could be an action raised to recover any losses made as a result of fraudulent activity in the currency exchange market, such as an action in tort.    

Criminal Penalties

These are the penalties that can be issued following a successful prosecution of a criminal offence.

If an individual is convicted under the Fraud Act, then the maximum penalty is ten years imprisonment and/or an unlimited fine.

The penalties that are available under the Theft Act are broadly similar, although the maximum period of imprisonment available to a court to hand down is seven years.

Forex Fraud Criminal Defence

At Lewis Nedas, we have a dedicated team of Financial Crime lawyers who have a wealth of experience in handling allegations of misconduct in relation to Forex Trading Fraud.

Our team is well-versed in the rules and regulations that govern trade of foreign currencies, as well as the associated risks. We understand that these cases require a high level of skill and knowledge, which is why we use only experienced attorneys who have extensive experience in this area of law.

Contact Us Today

Our attorneys are committed to providing our clients with a solid defense strategy. We will work with you to understand the legal frameworks that apply, and can advise you on how best to navigate the regulatory environment.

We work alongside our clients, and bring our expertise and tenacity to the fore, and will conduct our business with the best interests of you and your business in mind, and you can be sure that you are being looked after by an expert team of dedicated Financial Crime lawyers.

If you are in need of information in regards to exchange scams involving foreign currency, laws, regulations surrounding trading and market abuse, or any related query, our lawyers can help.

Contact Lewis Nedas for expert help today.

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