Liberty Reserve, the leading payment
channel for traders in emerging and frontier markets, has come under
fire and the firm has been taken out of operation, according to a report
in the Tico Times. As reported, the owner of the South American based
company has been arrested by authorities in Spain in alleged connection
with serious financial crimes.
It is believed that Arthur Budovsky Belanchuk (39), owner of the
popular Liberty Reserve, was arrested on Friday 24th of May in Spain as
part of an international operation spearheaded by the United States and
Costa Rican governments on financial crime. Mr. Belanchuk, a Costa Rican
citizen of Ukranian origin, was under investigation since 2011 after
authorities flagged his firm for money laundering. Apart from financial
and general e-commerce, it is thought by the investigators that the
company engages in illicit payments from criminal activity such as child
pornography and drug trafficking.
Forex brokers have been benefiting from Liberty Reserve’s vast access
as a payment provider, especially in countries where traders face
difficulties in transferring funds. “Liberty Reserve was a ‘gift’ for
several traders, especially after the State Banks’ (State Bank of
Pakistan) changes to international money transfers”, said Masroor Ghoori
an introducing broker and analyst from Karachi, Pakistan, in a comment
to Forex Magnates. Liberty Reserve is a payment channel whereby people
can send and receive secure payments without revealing their account
numbers or identities.
Forex brokers operating from heavily regulated markets such as the UK
are obliged to use payment channels that are regulated, for example UK
brokers use services provided by the likes of Money Bookers. Liberty
Reserve (LR) an un-regulated service is used by several international
forex brokers, such as; Marketiva, FXOpen, Markets, Instaforex and
others.
Liberty
Reserve has been widely used by traders where central banks restrict
bank transfers to foreign entities; for example in countries such as
Malaysia, Pakistan, Argentina, Nigeria and Brazil the company has been
the preferred payment method. The service offers traders a fast and cost
effective method with charges capped at $2.99.
Liberty Reserve’s website has been shut down and none of their
international representatives in India or Malaysia were reachable for
comment. Dery Rusdan one of the largest introducing brokers in Indonesia
said in a comment to Forex Magnates: “We always thought that Liberty
Reserve could have issues like e-gold but this was a shock, business
will suffer.”
A Dubai based brokerage firm who wished to remain anonymous told us:
“We average around $250,000 to half a million in monthly deposits,
mainly from Asia and Africa.
Forex traders have faced issues with payment providers in the past, like
with e-gold, a digital currency provider that was found guilty of money
laundering by US authorities”.
Source: ForexMagnates
