The evolution of the global trading industry

A Forex explosion

The foreign exchange (forex) industry has seen incredible growth over the past five years driven by the rise in online platforms that make the forex market more accessible than other markets. While the mechanics behind a forex trade are identical to a trade in well know markets there are many upsides of the forex industry that set it apart - currency can be traded twenty-four hours a day seven days a week; the industry is accessible in terms of financial requirements; many many firms don’t charge commission – and have made it the largest financial market in the world.

Mapping opportunity and risk

The opportunity is there but so is the risk – for traders and for brokerages alike. While traders balance the risk and opportunity associated with a currency exchange brokerages are faced with the task of meeting customer expectations and regulatory requirements. Customers are attracted to forex because of its accessibility and will not tolerate a complicated, time consuming onboarding experience.

Regulators tend to consider forex to be a high risk market, more so than stock exchange markets; as such, brokerages are under constant scrutiny with AML and KYC checks enforced across nearly every jurisdiction. Forex organisations must be able to demonstrate that a customer’s identity has been verified and screened to identify high risk, politically exposed or sanctioned individuals.

After onboarding

It is important to remember that when it comes to risk and compliance onboarding is just the beginning. After all customers are just people and people change. Over the course of a year, a month or even a week a customer appeared to be a VIP customer and a golden opportunity could transform into a high risk customer the moment their name is added to a PEPs or sanctions list, an adverse media or disqualified directors database, or any other blacklist or watchlist that raises flags for a brokerage.

Screening at onboarding provides an important safe guard at the first point of contact; however, brokerages have a responsibility to maintain a clear picture of their customer base in order to make informed decision about their business practices.


GBG products to help...

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GBG ID3global can verify the identity of almost anyone, anywhere in the world, at any time.

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