Payment Services Providers And Their Responsibility In Illegal Broker Schemes

Update April 24, 2019: FinTelegram received information from Jubiter Technologies and their measures taken to avoid money laundering. The Estonian company joined FinTelegram’s fight against illegal broker schemes and money laundering. Given the documents we have been served with Jubiter seems to be one of the crypto payment services providers that fight the abuse of crypto for illicit businesses.

Systematic investor fraud involving illegal broker schemes would not be possible without intentionally or negligently co-operating payment service providers and banks. Only the facility to launder and move the illicit money worldwide gives illegal brokers the opportunity to rip off investors and maintain globally operating criminal organizations. In this respect, these payment service providers must be qualified as co-conspirators in the sense of criminal law and held accountable by authorities and investors.

Money laundering and investor fraud

Payment service providers (PSP) participating in illegal broker schemes do not only enable the cheating of investors. Moreover, these payment service providers launder the money for the fraudulent brokers. Money laundering is the act of concealing the transformation of profits from illegal activities and corruption into ostensibly “legitimate” assets

Since the 4th AML Directive at the latest, PSP, banks and other professional services providers have been obliged to inquire extensively about the customers and their beneficial owners. The AML directive calls it Customer Due Diligence (CDD) and the Ultimate Beneficial Ownership (UBO) audit. The aim is to exclude criminal funds from the banking system because they threaten the stability of the economy and society, as stated in the opinion on the 4th AML Directive:

Flows of illicit money can damage the integrity, stability and reputation of the financial sector, and threaten the internal market of the Union as well as international development. Money laundering, terrorism financing and organised crime remain significant problems which should be addressed at Union level.
In order to facilitate their criminal activities, money launderers and financers of terrorism could try to take advantage of the freedom of capital movements and the freedom to supply financial services which the Union’s integrated financial
area entails.

DIRECTIVE (EU) 2015/849 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 May 2015

EU Payment processors must adhere to the AML directives and perform AML checks on their customers and individual payments and report suspicious payments to the respective authorities. In most regulatory regimes, PSPs and banks have to implement appropriate software algorithms as part of their risk management system. In any case, the KYC/AML approach of PSPs must prevent illegal transactions from gaining access to the banking system.

According to the U.S. FBI, illegal brokers stole up to USD 10 billion per year in binary options alone in recent years. Provided that this huge number is actually close to the truth, we want to take a closer look at the payment service providers involved in illegal broker schemes identified by us during the past months.

InvestBank (iBank)

The situation with the Bulgarian Investbank (www.ibank.bg) and illegal broker schemes is an excellent case in point. Although Investbank is an EU-regulated financial institution it operates as a sort of offshore bank within the EU. That is where the operators of illegal brokerage schemes from the EU, Eastern Europe, United States, Russia, and Israel maintain their accounts. Millions of illicit dollars are processed via the Bulgarian bank, with significant amounts of cash transactions well above the EUR 10,000 threshold allowed by the AML rules. As an EU bank in the SEPA network, Investbank should be a watchdog to protect the SEPA system from money laundering and money from organized crime. In fact, however, the Investbank promotes these illegal activities by negligently applying the KYC/AML framework and facilitate the laundering of illicit money from criminal organizations.

Deutsche Bank’s 2014 money laundering offenses (AML) seem almost cute against the behavior of the Bulgarian Investbank. As FinTelegram reported, Deutsche Bank was fined USD 625 million to the U.S. and U.K. at the time. the supervisory authorities.

The members of Investbank’s supervisory board are Mrs. Petia SLAVOVA, Festa Holding AD, and Mrs. Dimitriyka ANDREEVA.

Praxis Pay (Praxis Cashier)

Beside Bulgarian Investbank, Praxis Pay, based in Cyprus, also plays an important role in global money laundering schemes around illegally acting broker sites. Many of the illegal broker sites work with Praxis Pay and collect customer funds via their platform. The company is also unlikely to use KYC or AML or include them in its solution. Although Praxis Pay is not a registered payment service provider, it would still have to comply with the KYC/AML guidelines.

PayCashier was previously known as Praxis Pay. The company claims that they are a leader in the financial services sector. Praxis Cashier System Ltd, which is officially based in Cyprus, has intensive contacts and working relations with the Israeli scene in the field of illegal brokers. Up until today, Tel Aviv is given as the place of residence on the Facebook page. Amit KLATCHKO, the company’s founder and director has his roots in Israel.

Payvision

In addition to Praxis Pay, Payvision, a Dutch payment service provider plays an important role in the collection and distribution of illegally received investor funds. FinTelegram received corresponding account data showing that millions of investor money are distributed via Payvision to the various offshore companies of the illegal operators.

Payvision is likely to be one of the most important money distributors of illegal brokers within the EU alongside Investbank. Questions of FinTelegram at Payvision have not been answered yet.

[to be continued]

Report Suspicious Payments

If you have information about illegal money flows with illegal brokers or have lost money with illegal brokers, please let us know via our whistleblower system. We will share your information with the appropriate authorities.