The Forex Fraud organization has recently provided Ponzi Scheme Alert with a special warning against forex scams prevalent in the British Virgin Islands region.

Although forex scammers are can be located nearly anywhere on the international map, this specific area contains some shady secrets that should be recognized by all individuals completing due diligence on suspicious companies or “investment opportunities” claiming to generate returns through the forex market:

— — —

The British Virgin Islands is a small nation located to the east of Puerto Rico in the Caribbean Region. It is comprised of various tiny land masses scattered in a wide region, but most human activity takes places in the island of Tortola with an area of about 100 sq. km. It is a popular destination for the rich and affluent citizens of the world, and derives about half of its revenues from tourism.

But there is also a rather dark side to this idyllic place. The British Virgin Islands is something of a diploma mill for some of the more questionable and unreliable businesses in the world of finance including the forex business. The island makes a size able portion of its revenues form the registration of companies, where few questions are asked, and does not tax corporations for their activities. This lax attitude of the BVI towards upstart firms and financial corporations has made it a premiere location for both fraudsters and financially sophisticated economic players, both individual and corporate, who, for many different reasons, would prefer to stay away from the scrutiny of authorities and officials in the developed world.

Forex scammers and fraudsters would obviously want to stay as far away as possible from the major financial centers of the world in Europe or the U.S. where regulation and oversight is supposed to be much tighter than in locations at the periphery of the advanced world. There are number of forex fraudsters located in far away places, but among those the BVI stands out with its laxity in granting registration, its completely non-existent oversight of company activities, weak legal enforcement of any regulations that may exist, and overly corporate-friendly attitude.

Does it all mean that any firm registered in the British Virgin Islands is a forex scam? That would be an overstatement, because companies that are otherwise legitimate may choose to be headquartered at such a place for the favorable tax rules and ease of the registration process. Nonetheless, if you’re a beginner, or simply know too little about forex brokers, and industry in general, it is a good idea to avoid brokers located in this region, at least until you gain a better understanding of the broker’s business.

Unfortunately, there is no completely safe way of avoiding fraud in forex. If a manager decides to defraud customers, he can do so more or less undetected, as shown by the numerous high profile cases of fraud that have occurred in the past years. The lessons of the Bernard Madoff case are no less valid for fore traders than they are for commodity or stocks traders. Make sure that you know your partner well, keep emotions out of your relationship with your manager or broker, and always depend on logic while considering any aspect of your relationship. These, and similar precautions may well serve to help you avoid the more unpleasant sides of the forex business.

— — — — —

- Forex Fraud

Tags: Bernard Madoff, British Virgin Islands, BVI, forex fraud, forex fraudsters, forex scammers, forex scams, ponzi scheme