Plus500 released a statement on Friday giving more detail on the anti-money laundering checks that have led to account freezes this week and sent its share price into tail-spin.
The update reveals that the UK’s financial watchdog, the Financial Conduct Authority (FCA), is behind the whole thing.
The Israel-based but London-listed trading company says the FCA told it back in January it needed an independent review of its anti-money laundering procedures. That review finished last Friday and the FCA was not happy with the findings.
The regulator told Plus500 to stop everything until it had put in place stricter checks to make sure it’s financial bets weren’t cleaning cash for criminals.
Before that the FCA had already made Plus500 stop processing any transactions for customers until they had required some basic ID documents. Prior to that it is understood that the company only required the identity verification when people looked to withdraw cash.
‘The current situation is regrettable’
Plus500 said 40 people are working to get suspended customers back online but the process will likely take weeks.
It’s also not taking any new customers until it has agreed on appropriate anti-money laundering checks with the consultant appointed to review its systems.
Chief executive Gal Haber said:
Plus500UK customers can rest assured that we are doing everything in our power to resolve the current issues. Customer balances are protected in segregated accounts with major international banks and we are mobilising significant resource to complete the verification project.
Shareholders can also rest assured that we are doing everything in our power to protect our UK market position and we are in close dialogue with the FCA.
The current situation is regrettable, and we apologise to customers whose accounts are frozen; we intend to resolve these issues within as short a time as possible. We will update customers and shareholders with the progress being made over the coming days and weeks.
Plus500 made no mention of criticism levelled at it online today by a hedge fund shorting the stock. The company said to expect an update at its annual general meeting next Wednesday.