CySEC Cancels 4 Brokers’ ICF Membership

The Cyprus Securities and Exchange Commission (CySEC) has recently disclosed the withdrawal of membership for four investment firms based in Cyprus by the Investors Compensation Fund (ICF). The affected entities include Stone Edge Capital Ltd, Holiway Investments Ltd, FXBFI Broker Financial Invest Ltd, and KAB Strategy Ltd.

The decision to revoke the membership of these firms stems from CySEC's choice to withdraw their Cyprus Investment Firm (CIF) authorizations, as officially stated by the regulatory body. Despite this development, clients covered by the four firms will retain the ability to file compensation claims for investment activities conducted prior to the withdrawal of membership. Eligibility criteria for such claims are outlined in CySEC's directives.

Established to provide compensation for covered investors in cases where the CIF fails to meet its obligations, the ICF operates under the regulatory mandate that all Cyprus Investment Firms must be its members. Consequently, when CySEC withdraws the CIF license of a firm, the ICF automatically terminates its membership.

KAB Strategy's license withdrawal, disclosed in the latter part of 2023, resulted from the company's voluntary renunciation. Meanwhile, FXBFI Broker Financial Invest also voluntarily relinquished its license, but only after facing a series of enforcement actions against the company due to deficiencies in anti-money laundering (AML) and combating the financing of terrorism (CFT) policies, controls, and procedures. This led to a €50,000 penalty imposed on FXBFI, the operator of 101investing.

In the cases of Stone Edge Capital and Holiway Investments, CySEC's investigations revealed violations of CIF authorization terms, prompting the cancellation of their licenses. In May, CySEC highlighted Stone Edge Capital's non-compliance with organizational standards, citing a lack of adequate systems to identify money laundering transactions. Additionally, the firm neglected to implement internal reporting systems and procedures.