Forex broker scams: the patterns that workThe convincing ones do not look fake. They have a real company name, a real licence number and a working platform - all of which can be copied from a firm that genuinely holds them.How to check a broker's licence
Nine steps, on the regulator's website rather than the broker's. The one that catches people out is the first: you are not checking a brand, you are checking a company, and the brand is usually several of them.
Every broker website carries a line of regulator names and licence numbers in the footer. It is the least-read text on the internet and one of the few parts of the site that is legally obliged to be accurate.
Reading it is not the same as checking it. Checking means going to the regulator's own register and finding the company - which takes about five minutes and is the only step here that produces evidence rather than a claim.
The procedure
In this order. Steps one and two are where the answer usually is; the rest confirm it.
1. Find the legal entity, not the brand
The footer or the client agreement will name an actual company: something like "Raw Trading Ltd" or "XM Global Limited" rather than the trading name on the logo. Write down the exact wording including Ltd, Limited, Pty, plc or Inc. That string is what you search for.
2. Work out which entity would take you
Multi-entity brokers assign clients by country of residence. The account-opening flow, or the client agreement you would sign, states which one. If a broker will not tell you before you deposit, that is itself an answer.
3. Find the regulator and the licence number
Both should be published beside the entity name. Note the number exactly. Regulators index by it, and searching by number is faster and less ambiguous than searching by name.
4. Go to the regulator's own register
Type the regulator's address yourself or find it through a search engine. Never use the link on the broker's website to reach the page that verifies the broker's website.
5. Search, and read the status
Authorised, active, suspended, revoked, surrendered or expired. A record existing is not the same as a licence being current, and registers keep historical entries, an expired licence still appears, it simply no longer authorises anything.
6. Check what it actually permits
A licence authorises specific activities. A firm may be permitted to arrange deals but not to hold client money, or to deal in some instruments and not others. A company registration is not a financial licence at all, and offshore firms sometimes present one as though it were.
7. Match the trading name
Registers list the trading names a licensed entity is permitted to use. If the brand you are dealing with is not among them, that gap needs explaining before anything else proceeds.
8. Match the website, email and phone
Registers publish the firm's official domain and contact details. Compare them character by character with where you actually are. This is the step that catches clone firms, and it is the one people skip.
9. Search the regulator's warning list
Most publish warnings about unauthorised firms and clones. Search the company name and the domain separately: a clone appears under the domain, not under the legitimate firm's name.
Clone firms, and why step eight exists
A clone takes a genuine regulated firm's name, company number and licence details, and puts them on a website at a slightly different address. Someone who checks the licence number finds a real, active, properly authorised firm - because it is one. It is simply not the firm they are talking to.
The differences are deliberately small: an extra hyphen, a different top-level domain, a plural, a homoglyph. Which is why the register's published domain matters more than the licence number: the number will always check out, and the domain is what the clone cannot copy.
Contact details are worth the same treatment. A firm using a free email domain while the register lists a corporate one is a straightforward mismatch.
Registered is not regulated
Almost every jurisdiction has a companies registry, and appearing on it means only that a company exists. It says nothing about financial authorisation, it involves no capital requirement, no conduct rules and no supervision, and in many places registration takes a day and costs very little.
Language like "registered in" or "incorporated in" or "registration number" is doing different work from "authorised and regulated by", and offshore firms use the first set with some enthusiasm. Financial regulation appears on a financial regulator's register or it does not exist.
Tiers, and what they actually mean
Regulators are commonly sorted into tiers, and the distinction is real but it is about enforcement rather than paperwork. A Tier 1 regulator - the FCA, ASIC, CySEC, MAS and equivalents - typically imposes meaningful capital requirements, mandates client money segregation and negative balance protection for retail clients, caps leverage, runs a compensation scheme and has the resources to inspect and to prosecute.
A Tier 3 or offshore regulator may require a fee and an address. Both produce a licence number and both look identical in a website footer.
Across our hundred brokers, 70 hold a Tier 1 licence, 13 are Tier 2, 10 are Tier 3 and three are unregulated. The tier of the entity holding your account is the figure that matters, and for a multi-entity broker it can be several tiers below the one advertised.
Ambiguous acronyms are where this gets slippery. FSC is Mauritius, the BVI, Belize and Bulgaria. FSA is the Seychelles, Japan and Denmark.
What a licence does not promise
It is not a guarantee against the firm failing, and regulated brokers do fail. It is not an endorsement of the business, a comment on its pricing, or any indication that you will make money - most retail accounts lose money at regulated brokers too.
What it gives you is a rulebook the firm has to follow, an authority with power to act, and usually a route to complain that costs nothing. That is worth a great deal and it is a narrower thing than "safe".
Client money segregation, negative balance protection and compensation schemes are three further safeguards, each independent. Ninety-nine of our hundred brokers segregate client money; 34 have no compensation scheme at all.
The shortcut, and its limits
Every review on this site records the legal entity, the regulators, the licence numbers as the register writes them, and the date it was checked. That is a starting point and a way of seeing what a broker looks like before you spend the five minutes.
It is not a substitute for the five minutes. Our records are a snapshot with a date on them; a register is live, and it is the only source that can tell you the status today. Where a regulator's acronym is ambiguous we write the jurisdiction in brackets - FSC (Mauritius), FSA (Seychelles), FSCA (South Africa) - because one authority spelled three ways is how a footer stops being checkable.
Questions people ask about broker licences
How do I know which entity holds my account?
The client agreement names it, and the account-opening process assigns it from your country of residence. If you already have an account, it is on your statements and in the terms you accepted.
The licence number checks out. Am I safe?
Not necessarily. That is exactly how a clone firm works. Also compare the website domain, email and phone number against what the register publishes.
What is the difference between registered and regulated?
Registration means a company legally exists. Regulation means a financial authority has authorised it to conduct specific activities and supervises it. Only the second appears on a regulator's register.
Does offshore mean unregulated?
No, but the supervision is usually much lighter, and capital requirements, client protections and enforcement capacity all tend to be weaker. It is a difference of degree that can be very large.
Can a regulated broker still fail?
Yes. Regulation reduces the likelihood and improves what happens afterwards through segregation and compensation schemes. It does not eliminate the risk.
What does a suspended licence mean?
The authorisation is not currently in force, usually pending investigation or a compliance failure. A firm should not be taking new clients under one, and it is a strong reason not to be one.
Why does my broker list ten regulators?
Because it operates through ten subsidiaries. That is normal for a large broker and none of it applies to you except the one that holds your account.
What if the broker is not on any register?
Then it is not regulated by that authority, whatever its website says. Three of the hundred brokers we rate are unregulated, and each review says so plainly.
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Nothing here is financial advice. Leveraged products can lose more than they make.
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