CySEC Withdraws CIF Authorization from Leverate

In a regulatory decision, theCyprus Securities and Exchange Commission (CySEC) has announced the withdrawalof Cyprus Investment Firm (CIF) authorization from Leverate Financial ServicesLtd. The decision, made during CySEC's meeting on December 4, 2023, followed thecompany's explicit renunciation of its authorization.

CySEC Response to RenouncedAuthorization

The recent decision by thecompany to voluntarily renounce its authorization has prompted CySEC to takeaction in accordance with relevant provisions of the Investment Services andActivities and Regulated Markets Law.

The withdrawal of CIFauthorization effectively bars Leverate Financial Services Ltd from continuingits operations within the regulatory framework overseen by CySEC. The announcement does not citeany judicial review associated with the decision, indicating that thewithdrawal of authorization stands as final, pending any future legaldevelopments.

Leverate, established in 2008, has evolved into a technology and services provider within the brokerage industry. It has expanded globally and currently employs 150 individuals, compared to its initial 4-person team. The company offers dedicated account managers, positioning itself as a notable player in the Forex brokerage sector.

Back in October, Brad Alexander at Leverate opined that Limassol, Cyprus has been a major center for retail FX/CFD Brokers for many years. Many multi-asset brokers feel that the CySEC license is more favourable to them as they have access to the entire European market.

The license may not carry the prestige of the UK’s FCA license, but it is considered to be in a higher category than most offshore jurisdictions. One advantage that the CySEC License brings to the table over the FCA license is the ability to offer Cryptocurrency CFDs to its clientele, at extra cost in the application stage. Trading of Crypto CFDs is not allowed under the FCA.

CySEC Revokes CIF for Four Firmsand ICF Withdraws Membership

Earlier, CySECannounced the withdrawal of CIF authorizations for four Cyprus-basedinvestment firms: Stone Edge Capital Ltd, Holiway Investments Ltd, FXBFI BrokerFinancial Invest Ltd, and KAB Strategy Ltd, as reported by Finance Magnates. Additionally, theInvestors Compensation Fund (ICF) revoked the membership of these firms.

The ICF's decision to revokemembership followed CySEC's withdrawal of CIF authorizations for theaforementioned firms. Despite this, covered clients of these firms are stilleligible to file compensation claims for investment operations conducted beforethe membership withdrawal, provided they meet CySEC's eligibility criteria.

CySEC's investigations revealedviolations of CIF authorization terms by Stone Edge Capital and HoliwayInvestments. Stone Edge Capital was found non-compliant with organizationalstandards and lacked sufficient anti-money laundering (AML) systems. HoliwayInvestments also faced compliance issues.

In the case of FXBFI BrokerFinancial Invest, inadequate AML/CTF policies led to a €50,000 penalty. KABStrategy voluntarily renounced its license. CySEC's actions underline theimportance of regulatory compliance and investor protection within Cyprus' financiallandscape.