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Banxso and Afrimarkets were in the news for the past few months for allegedly using deep fakes to market their investments.
Picture: Moneyweb
The FSCA has finally withdrawn the Financial Service Provider licence of Banxso and provisionally withdrew the licence of Afrimarkets Capital after investigating their contravention of various financial laws.
The Financial Sector Conduct Authority (FSCA) says in a statement it provisionally withdrew Banxso’s licence on 15 October 2024 after it made preliminary findings during an investigation. “Banxso was afforded an opportunity to respond to the provisional withdrawal notice.
“It was also afforded an opportunity to provide reasons to the FSCA about why the provisional withdrawal should be lifted or not be made final. The FSCA considered the preliminary findings as well as Banxso’s submissions about the provisional withdrawal and decided to finally withdraw Banxso’s financial service provider (FSP) license.”
The FSCA says it believes that Banxso contravened various financial sector laws in a material way and that it no longer meets the requirements to be a fit and proper financial services provider.
“The investigation findings included that Banxso, among other contraventions, misappropriated client funds, provided false and/or misleading information to clients and to the FSCA and did not act in the best interests of clients.”
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FSCA also provisionally withdrew FSP license of Afrimarkets
The FSCA also provisionally withdrew the licence of Afrimarkets. The Authority points out that Afrimarkets and Banxso are linked through common directorships and key persons and conducted their financial services business in a very similar manner.
The FSCA says in another statement that it decided on this step because it is concerned that there may be a risk of harm to clients and/or the general public if Afrimarkets continues its operations as a financial services provider.
“The provisional withdrawal is based on the findings of our preliminary investigation regarding the activities of Afrimarkets and its possible association with deepfake advertisements. The FSCA is also concerned about the apparent aggressive and pressurised sales techniques Afrimarkets agents use when selling financial products to clients.
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FSCA says Banxso’s clients suffered material losses
“They also promise unrealistic returns and fail to conduct the required risk and needs analyses before placing clients in specific financial products while clients suffer material losses.”
The FSCA says the consequences of the provisional withdrawal are that Afrimarkets is unable to conduct any further financial services business or receive any additional funds from its clients.
In this case the FSCA emphasises that this is a provisional withdrawal of Afrimarkets’ license based on the findings of its provisional investigation. Once the investigation is finalised, the FSCA will consider the investigation and any submissions by Afrimarkets.
Meanwhile, the FSCA gave Afrimarkets an opportunity to provide reasons why the provisional withdrawal should be lifted or not made final.
The FSCA says it will update consumers in due course regarding the investigation and its decisions in this matter.
ALSO READ: FSCA warning: These well-known people cannot help you to invest
FSCA already warned consumers about deep fakes
At the beginning of the year, the FSCA already emphasised that the impersonators are not authorised in terms of any financial sector law to provide financial services to the public. The impersonators could not be contacted for comment, the FSCA says.
Therefore, the FSCA said, consumers should refrain from accepting financial advice, assistance, or investment offers from individuals or entities not authorised by the FSCA to avoid unnecessary risk.
“Authorised financial services providers must clearly display their authorisation status in their documentation. If this is not present, consumers should first investigate further before making any payments.
“The FSCA urges the public to be vigilant when investing. The number of fraudulent schemes is increasing, with South Africans losing millions each year to these operations. Some illegal schemes may appear legitimate, making it crucial to identify warning signs.”
The FSCA said key red flags include promises of unrealistic returns and claims that an FSCA licence is unnecessary. In case of doubt, the public is encouraged to consult an authorised financial services provider.”
