Stocksons.live, Pro Trader Ltd., Zenith Assets Management, www.bit-forex.ltd, Sun CFD Trading Inc., www.500.trade, Global Markets Association and IGLS Invest. What these companies in common is that they are in the crosshairs of the Luxembourg Financial Sector Supervisory Commission (CSSF). The companies seem to be financially savvy, but are in fact traps for unsuspecting investors. Many retail investors are keen on the outfits (supposedly) having a Luxembourg license. Fraudsters often use the address of real banks and real investment firms, which can trip up investors.
The CSSF stated:
“The vast majority of our alerts target fictitious websites and companies, and not genuinely existing companies that are established in Luxembourg carrying out activities without authorisation. On these fabricated websites, unknown people claim to exist as a company in Luxembourg using addresses in Luxembourg without having established an office there or are cloning existing companies whose identity they usurp.”
‘Real fake’ tactic
This is what is known as the ‘real fake’ tactic, which consists of counterfeiters using an authentic or slightly misappropriated company name, an existing approval number which is not their own, a reference to an official regulator and/or other genuine--but reinterpreted--details.
Faced with the reputational risk for Luxembourg’s financial centre, the CSSF has been monitoring the problem for many years now. Especially so since the victims potentially come from all over the world, which means fraudsters can have an international impact. Reports are transmitted to the CSSF through various sources: individuals who obtain information from their usual financial service provider or directly from the commission, banks or approved institutions, or even fellow regulators.
“This scourge is not limited to Luxembourg, but concerns all countries, and there are numerous such warnings from counterpart authorities”, said the regulator. The CSSF explained the increase in these types of scams in recent years by pointing to three factors. First, “the ease of creating or duplicating websites and hosting them with ‘providers’ and on servers anywhere in the world”.
Then there are “all the new virtual means of communication, investment and wire transfer that no longer require physical contact between fraudulent service providers and clients”. The resurgence of this type of fraud during covid lockdowns is obviously no accident.
And last but not least: “The bait of falsely promised earnings with ‘online trading’ and cryptocurrencies.” Plus there is “the gullibility of people approached by fraudsters who are very experienced in persuading” people.
Report to the Public Prosecutor’s Office
It is difficult to estimate the number of victims. Many are reticent to alert authorities. That contributes to a certain level of impunity for the crooks.
The CSSF does not only issue alerts on its website. Each incident is the subject of a report to the Public Prosecutor’s Office, which has much broader investigative powers, in particular through international judicial cooperation. While the CSSF has powers of investigation and sanctions over the entities that are subject to its supervision, they are ineffective in tackling all the fakes.
The prosecutor’s office did not reply to requests for comment.
The CSSF also tries to make the general public aware of these scams. Through the initiative www.letzfin.lu, it has published a series of videos (in French and German) explaining how to react to financial fraud.