October 24, 2020

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AFM is increasingly seeing fraud by foreign investment companies

AFM is increasingly seeing fraud by foreign investment companies

“These companies have very sophisticated seduction tactics,” says Boerboom. “People are spoken to, called a lot, they build a friendly bond and then ask for an initial deposit.”

Companies sometimes create websites and display incorrect prices, the AFM says. “After a week someone suddenly has a profit of 50 percent. And then comes the unique opportunity: Now pay in a few thousand euros again. This is how people invest more and more money in the investment.” People lose thousands of euros, in some cases even 100 or 200,000 euros, the AFM says.

People know they have been scammed when contact is suddenly broken or when people want to collect their winnings and it is not possible to do so. “They won’t be called back and the website will go down. And then they come to us.”

Hang up the phone

The difference from so-called boiler rooms, fake companies with fake shares that are not registered or licensed anywhere, is that these companies have a license. Even so, there isn’t much the AFM can do because it doesn’t directly monitor the companies. “We work with a European supervisory system. This means that you do not have to apply for a permit in every European country. If you have a permit in one country, you can apply for a European passport in all European countries. Offer services.”

Because of this, there is not much that the Dutch regulator AFM can do to prevent these practices. “These types of companies often choose the country they believe will be easiest to operate. Only when we get signals that something has gone wrong can we contact the regulators in those countries. We have contact with Cyprus, for example and sometimes withdraw. She allows it too. “

In June this happened with Hoch Capital Ltd, which traded under the name iTrader, according to AFM. This company has collected data from people who submitted information about fake ads. The AFM, but also the British regulatory authority FCA, received dozens of signals. In the end, the Cypriot regulatory authority announced that Hoch would issue the approval.

The people themselves can avoid being scammed, says Boerboom: “If you get a call with investment advice or a so-called one-time investment: hang up the phone. Don’t answer. That is the best advice.”