Now Plus500 is switching rejected UK customers to its Cyprus branch

Marcos Baghdatis of Cyprus serves to Simone Bolelli of Italy during day 4 of the Miami Open at Crandon Park Tennis Center on March 26, 2015 in Key Biscayne, Florida.Al Bello/Getty ImagesCyprus’ Marcos Baghdatis serves during day 4 of the Miami Open.

The saga at Plus500 rumbles on — the spreadbetting company is now letting customers that have failed beefed up identity checks at its UK operation switch over to its Cyprus branch.

The Israel-based but London-listed company, which lets people effectively bet on shares and currencies through something called a CFD, was forced to freeze thousands of UK trading accounts last week after the UK regulator, the FCA, told the company its anti-money laundering checks weren’t up to scratch.

Management have repeatedly said they are working as fast as they can to get checks up to speed and accounts unfrozen. All UK customers have been asked to provide additional documents to prove they are who they say they are.

Now foreign exchange industry website LeapRate is reporting that Plus500 is letting customers who have been turned down by the UK site under its new rules move over to it’s Cyprus-regulated platform.

LeapRate claims to have a copy of an email sent to a customer that failed the new identity checks informing them that they are being switched to Cyprus. Here’s a snippet (emphasis ours):

Kindly bear in mind that up till 18.05.15 your trading account was under the FCA UK regulation. According to the regulator’s requirements your account was undergoing a review according to their new guidelines.

In this review, we had to reject the approval of your residence verification document which was previously approved since he does not meet the new and updated requirements.

On 18.05.15, your trading account moved to being regulated by the Cyprus Securities and Exchange Commission along with many of our customers. This action was made due to internal company decisions.

The email goes on to say that the client will still have to provide verification documents but this looks pretty bad for Plus500.

At the company’s annual general meeting yesterday Plus500 chairman Alastair Gordon said the company had realised it needed to have “best of breed” compliance and security checks.

But if the company is just switching failed accounts over to a subsidiary to have a second crack at verification, it looks like Plus500 is giving more thought to protecting revenue than really weeding out money launderers.

A spokesperson for Plus500 told Business Insider: “Some account holders are being given the option of opening a new account in Cyprus but they will have to undergo the normal account opening procedures there; this is not a material development at this stage.”

The company wouldn’t comment on whether customers who failed the UK checks were offered the switch, saying it could not discuss individual accounts. You can read the original LeapRate report here.

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