Earlier in the year when Israel finally decided put a stop to the widespread binary options frauds emanating from its shores it was applauded on the global stage for addressing the issue and moving to prevent further frauds. However, Simona Weinglass of The Times of Israel reports that at a recent meeting of the Knesset Reforms Committee Superintendent, Gabi Biton, the leading senior officer investigating financial fraud and money laundering, was shocked at the level of organised criminal activity in this sector, saying "What we're seeing here is a massive organized criminal enterprise. We are talking about criminals at various levels of crime organizations, up to the very top."
Superintendent Biton explained that organised crime groups had seen the capacity in the binary options industry for huge economic potential leading to the generation of between $5 to 10 billion a year at the expense of ordinary people, largely novice investors lured by deceitful salespeople who hide behind fake identities.
Disappointingly, despite the apparent good intentions of the Knesset, the original draft of the proposed legislation has been substantially altered and weakened, to the shock of many of those present. Gone are the clauses that would have prohibited Israeli forex, CFD (Contracts for Differences) and other online trading companies who operate without licences. The consequences of the watered down draft effectively opens the door to fraudulent binary options brokers re-branding as forex, CFD and other online trading without any hindrance. The changes to the version drafted by Israel Securities Authority together with the Justice Ministry and the attorney general's office were made without being publicised and were quietly published by the Knesset Reforms Committee on June 20.
Worryingly, The Times of Israel reported that a source close to the Knesset indicated that there is enormous pressure on members of the Knesset by the industry to dilute the Bill, expressing doubt that a more robust Bill would have been passed regardless of whether the committee approved it.
Superintendent Biton attempted to reassure those present that the Bill is adequate as it has provision for the finance minister to extend the ban to other financial products in the future. He also pointed out that now the police are aware of the extent and nature of the fraud issue in Israel they are conducting investigations into the industry and the key figures involved.
Superintendent Biton made it clear that he and the enforcement agencies have a clear grasp of how the fraudsters operate through rigged trading platforms, and also indicated that the heavy use of sophisticated high-tech payment systems for processing payments which can stay with the processor for up to 30 days is extremely telling, asking the binary options representatives "so what money are you investing? What are you working with?" He further commented that Israeli police have begun to follow the binary options money trail and to identify the true owners of the websites registered to shell companies in places like Belize and the British Virgin Islands.
Giambrone's lawyers continue to pursue the fraudulent brokers through the courts aiming to recover lost funds and hit the fraudsters in the pocket.
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