I’ve been a member of the FPA for a long time. I’ve seen some strange reasons used by forex brokers to delay paying money owed to traders, but this one is new.
FPA member Ahmet Faruk Arapogla deposited US$4300 into his trading account with AlmaForex. His trading went well and he made a profit of over $6000. Everything was fine, until he tried to withdraw $8000 in April of 2009.
That’s when things started getting strange. Alma Forex told Ahmet that the $8000 withdrawal was processed and then rejected by one of the banks involved. Instead, his $4300 initial balance was returned and he got cryptic messages like this:
“Alma Forex reserves the right to refuse to process a transfer at any stage, where it believes the transfer to be connected in any way to money laundering or criminal activity. Alma Forex is prohibited from informing a customer that they have been reported for suspicious activity.”
OK, I could almost buy that. Holding a transfer while criminal activity like violating Anti-Money Laundering laws is checked seems reasonable. Almost, but not quite. If Ahmet was really suspected of some sort of crime, why would they give back his initial balance instead of just keeping his profits?
AlmaForex’s Support Manager, Nicholas Avlydis informed Ahmet that their investigation would take until July 21st. Despite the statement Alma Forex is prohibited from informing a customer that they have been reported for suspicious activity, he wrote:
“Our Risk Department have been recommended to suspend our service for you as our client.
The reason is that at present moment any payments from/to your account fall under the scope of Anty-Money Laundering Policy. Therefore we are forced to refuse you our service and refund your payment.”
I guess he didn’t actually say whether or not Alma Forex actually reported Ahmet for anything. Still, the fact that there was supposed to be a suspicion of illegal activity makes returning the initial balance nonsensical. Are we supposed to believe that it’s ok to hand back the original balance if someone is suspected of laundering the money or being engaged in other illegal activity before verifying potential criminal activities with the authorities?
Ahmet was told that the risk department would need until July 21st to decide if his profits could be returned. The money was originally deducted from his account on April 20th. What kind of AML check would take 3 months?
Ahmet did the right thing. He kept trying to get his money back through direct negotiations for over a month before bringing this to the FPA’s attention. Then, FPA Investigator Gerard took the case.
Gerard exchanged a number of emails with Nicholas Avlydis about the issue.. Nicholas claimed that AlmaForex once “had a very negative AML experience” and now uses an externally supplied database for AML issues. Supposedly, Ahmet’s name showed up in one table of the database, but in one of the lower risk categories. Now, AlmaForex was waiting for the next database update.
Just to make matters more ludicrous, Nicholas told Gerard that the database provider was confidential, so there was no way for Ahmet to contact them directly to see if he could clear his name. Also, he claimed that AlmaForex had no way to expedite the issue. Repeated requests for information on what regulator AlmaForex was under were ignored. I’m sure you can draw your own conclusions about what that means about AlmaForex and regulation.
So, what we have here is a company saying “We can’t give you your profits (but can give you back your initial balance) because some SECRET database says you MIGHT be a money laundering risk and it only updates every few months. There is no appeal and no way to speed this up. Have a nice day.” This is about as silly as when Senator Ted Kennedy kept having problems at airports since “T. Kennedy” was a name on the TSA’s No-Fly List. Interstingly, Ted Kennedy’s real first name is Edward. I appears that “suspicious person” lists apparently don’t need to be completely logical.
Let me share the Secret Pharaoh Method of showing that Ahmet isn’t a money launderer. He didn’t more than double his account by trading nanolots with a 20 pip stop loss. He did some serious trading and took some risks along the way (I hope he’ll be kind enough to share a little about his trading strategies here in the forums). Someone looking to break AML laws wants to move money from one place to another so it can’t be traced while losing as little as possible along the way. If you are a really good forex trader who can consistently make profits, there’s no reason to engage in money laundering. If you are a money launderer, you wouldn’t be taking large risks trading forex. You would instead take some very conservative, low-risk trades just to show some account activity while arranging to be able to withdraw the money into a different account from where it started. Oh wait, I take very conservative, low-risk trades. Guess I’d better never change my bank account info with my brokerages or I’ll end up on a secret list somewhere.
I’m not sure if Ahmet changed accounts or not. If not, then this whole process is insane. If he did change bank accounts, it should be easy to verify with both banks that he’s the true account holder and to inform both banks of all transactions, thus ruining the possibility of any attempt to secretly transfer money from one place to another.
Nicholas did offer to have an AlmaForex representative meet live with Gerard or another FPA representative in the USA to show him this super-secret confidential data. Gerard explained to him that FPA policy is that all scam investigations are handled by email. This makes sure that there’s a complete written record of everything that’s said. This also greatly reduces bribery attempts and personal threats against the FPA and its investigators. Gerard said he’d be happy to look at any documents sent by email and would keep them confidential. Nicholas refused. Of course, I can’t see how showing a printout of some list that has Ahmet’s name stuck in a some sort of risk category would explain why the database provider was incapable of checking out individual names faster upon request or why there was no other way for Ahmet to pursue the issue.