‘Modern bookie’ has client accounts frozen

The investable assets of thousands of clients are under lockdown with regulators freezing the accounts of what many call a “sophisticated bookie.”

It’s the modern-day bookie for thousands of Britons, and money laundering concerns from regulators have frozen the accounts of the firm specializing in contracts for differences.

“Plus500UK customers can rest assured that we are doing everything in ‎our power to resolve the current issues,” said CEO Gal Haber. “Customer balances are protected in segregated accounts with major international banks and we are mobilizing significant resources to complete the verification project.”

Certainly not funny for the clients in question, the UK’s Financial Conduct Authority have frozen all the UK accounts of Plus500, an Israeli-based firm providing trading in CFDs for stocks, ETFs, indices, etc.

While CFD trading is conducted in many countries around the world, including Canada, analysts are quick to point out that it does not qualify as investing. Rather, it’s a bet on the price movement of a particular price movement. In many ways it’s more akin to betting on horseracing than buying a piece of a company.

The freezing of Plus500 accounts comes on the heels of the UK financial regulator’s review of the company’s anti-money laundering checks. Found to be unsatisfactory, the regulator wants to ascertain the identities of all Plus500’s UK clients before allowing the company to carry on with business.

The big concern is that clients are using CFD trading to cleanse funds obtained illegally through criminal activities.

"These issues originally arose in the UK company under the previous management team,” said Plus500 chairman Alistair Gordon. “The main thing that we have done over the past three or four months as part of the 166 [the FCA ordered review] work is to significantly strengthen the UK management team and to work with the skilled person to make sure the checks were up to speed."

To that end the company’s hired in the past three months both a new head of compliance and a head of money laundering reporting.
This might be good to get regulators off their back but it certainly doesn’t help clients whose cash is frozen indefinitely.