Before we dive into discussing what caused the fine, it needs to be clarified that the branch in question here is the Israeli Branch. Therefore the discussion needs to be undergone through Israeli regulatory laws, which is nothing new in all honesty.
Tuesday was the day that the Israeli regulated division of AvaTrade (ATrade) scored quite a hefty fine of NIS 576,000 ($153,000). The reasons for such a fine are quite vague for now, nobody truly knows what happened exactly, but surely it was caused by a violation. However, what type of violation could cause such a fine is still being researched.
These types of statements have been made in the past as well about UproFX. Where not only regulators but people not connected to the company would issue vague statements in order to not fully disclose the information, but in the end it always becomes clear.
The ISA didn’t stand idly by, when they mentioned the reasons AvaTrade scored this fine, they just issued a statement saying there was not only 1 infringement, but in fact, 2 made by the retail Forex broker.
As I already mentioned the statement put out by the regulator was quite vague, therefore it is hard to deduce what type of infringement was made by the company. The regulator did say that the Israeli branch of AvaTrade failed to make adjustments and controls in accordance with the local laws. It was also mentioned that a special report from the auditor was also not received. A small hint was made however by the regulator. In their statement they also mentioned how important it is to have proper maintenance of the customers’ money, therefore making people think that there was something connected to money laundering in the fine.
Not the first fine
As the title suggests, this is not the first time AvaTrade found in self in some trouble with the ISA. According to reports, the company has been fined once before as well.
A misleading marketing campaign was their first, misstep that earned them a fine of more than $40,000 (150,000 NIS) from the ISA. This happened in May of 2017, and regarding the time between fines, it hasn’t been too long. Besides, the Israeli regulator at the time was not as experienced and sophisticated as it is today. In fact, the ISA was quite new at that time, meaning that most of the companies operating from Israel had absolutely no regulation.
As you are already aware, a lack of a reputable regulator, caused some opportunistic people to take advantage of the situation. Meaning that there was basically a swarm of binary options brokers, who pretty much always turn out to be a scam, as well as FX brokers who looked normal on the surface, but ultimately defrauded their customers of their investments.
It’s sad to see AvaTrade have this kind of misstep, as it was the first broker to receive the Israeli license when the ISA was first formed.