Check that the company you are dealing with is a fully FSA regulated “payment institution”. You can check the register at www.fsa.gov.uk/register/home.do
Make sure the company keeps client’s money in a separate bank account. You can ask them for a letter from their bank that will show this
Avoid companies that ask you to pay the full amount upfront for a forward contract (i.e. money that you pay at today’s exchange rate but actually transfer in the future). They should only ask for a small deposit of say 10%
Avoid companies that do not require a deposit at all for a forward contract. This may sound strange but if they are doing this for all their customers they may have more risk than they can cover
Avoid companies that are offering you a rate the same as the “interbank” market rate or better than it. The interbank rate is the rate banks deal with each other in very large amounts and effectively it means they are getting absolutely no profit out of your transaction. Personally I would ask myself why…You can find interbank rates at www.worldfirst.com
Avoid companies that don’t require you to provide any identification documents. These are required by law in terms of money laundering regulations. If they are not doing the required checks it may suggest that the company is not a registered money services business.
For more information on Smart Currency Business call: 0845 638 0571 (or +44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyBusiness.com
Friday, 10 December 2010
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