Italy’s financial watchdog warns about a surge in unregulated investment platforms

Italy has noticed a sharp rise in the number of unregulated investment platforms that have been emerging in the country’s market, offering services to investors.

The country’s financial authority, the Commissione Nazionale per le Societa e la Borsa (CONSOB), raised an alarm, urging individual investors to stay vigilant and cautious when entering in financial transactions.

CONSOB warns of new unlicensed websites offering services to Italian investors

In addition to warning the public about unregulated platforms, the regulator also ordered local internet service providers to block four offshore websites that have been offering their services illegally in the country.

A similar problem was seen in countries around the world, where unregistered and even fraudulent platforms are offering services to individual investors, hoping to gather up their money before disappearing. CONSOB, as well as other regulators in various nations, have warned that fraudsters often try to pass themselves off as regulated financial services providers through various tricks.

Some adopt identities of existing, regulated companies, while others try to trick investors in different ways. CONSOB, specifically, noted that fraudsters might register domain names using relevant suffixes, such as “.fin” or “.bank” in order to appear more legitimate.

The Italian securities market regulator has been cracking down on these entities to protect retail investors. The most effective method of dealing with them is to simply make them inaccessible. This also includes products offered by companies holding licenses in other jurisdictions but not Italy itself.

As part of this most recent warning, CONSOB also shared that it banned four trading/investment platforms that were either fraudulent or were operating without the proper licenses. Those include Mango Group LLC, Trade 4 Nation, FX6, and Velohld. A brief inspection of the platform reveals that they were trying to attract inexperienced clients, offering them the ability to trade highly leveraged products.

CONSOB continues its crackdown

With these four platforms blocked, the number of platforms that CONSOB has made inaccessible between July 2019 and now has grown to 959 sites. CONSOB did not have the ability to ban the websites of financial firms before July 2019, but it was likely aware of a number of them prior to receiving this ability.

The regulator’s goal is to completely eliminate unlicensed trading in the country, allowing for a healthy ecosystem to develop and offer local investors a safe investment and trading environment. The regulator has uncovered hundreds of platforms thanks to a combination of AI-based search algorithms, customer reports, and its own investigations.

But, even after such platforms are identified, and with CONSOB having the ability to ban them thanks to the Growth Decree, it can still take days for the platform to become inaccessible due to technical reasons. During this time, investors must be made aware of the danger, hence the regulator’s warning.