Kenya's markets regulator to clamp down online currency brokers

Capital Markets Authority's Paul Muthaura

NAIROBI, KENYA: The market regulator is planning on clamping down on unlicensed online currency traders in a bid to regulate the Forex black market.

The Capital Markets Authority has warned Kenyans against engaging in online foreign exchange trading through platforms of unlicensed entities as they risk losing their investments and may not be protected by the law.

CMA boss Paul Muthaura said there are several individuals and entities carrying on the business of an online foreign exchange broker or a money manager without the relevant license by the Authority.

“The Authority will also take appropriate enforcement action against any persons or entities illegally conducting online foreign exchange trade or collecting client funds in contravention of the above regulatory provisions,” Muthaura said.

“Members of the public who have been affected or become aware of such illegal online foreign exchange transactions are advised to report to the Authority or to the Capital Markets Fraud Investigation Unit,” the CMA boss added.

The capital markets regulator, estimates that about 50,000 people, including brokers, dealers and money managers, are in the business and are mainly using offshore platforms that are not overseen by Kenyan regulators to offer the service.

Kenyans who have become techno savvy have increasingly been inclined to take up new products which may however open the Kenyan currency to volatility, money laundering or gullible investors become vulnerable to fraud

“CMA requires all online foreign exchange brokers or money managers not licensed by the Authority to cease and desist from trading, conducting sensitisations in Kenya and onboarding Kenyan investors or managing online foreign exchange portfolios,” Muthaura said.

The regulator has only issued one license to EGM Securities Limited (formerly Execution Point Limited) to operate as a Non – Dealing Online Foreign Exchange Broker.