The managing director of the Myanmar branch of retail foreign exchange trading service FBS has been arrested and remanded to Insein Prison for allegedly running a financial institution without a licence.
The Bureau of Special Investigation – Myanmar’s economic crime-fighting body – arrested U Zaw Moe Han on March 15 for allegedly breaking the Foreign Exchange Management Law and Financial Institutions Law.
The charges carry a penalty of up to three years’ imprisonment and two to five years, respectively. The case will be heard at Ahlone Township Court.
BSI began investigating Zaw Moe Han and FBS Myanmar in August 2017 after the Central Bank of Myanmar informed the Ministry of Home Affairs that the company was operating without a licence, BSI deputy director U Soe Lwin said.
The same month, Frontier published its own investigation into FBS, “Controversial forex trader FBS going for broke in Myanmar”. The article detailed how the company, which is licensed in Belize and headquartered in Russia, had been heavily promoting itself on social media and websites with Myanmar-language ads.
The Myanmar office has tried to keep a low profile, however. When Frontier visited last year, representatives granted an interview but refused to give their names (Frontier was later able to confirm that one of those interviewed was Zaw Moe Han).
They said the Facebook ads were arranged by the parent company, FBS Markets. They also insisted that the Myanmar office only offered training on how to use the FBS platform and not trading services.
But according to the BSI investigation, FBS Myanmar transferred US$313,374.28 to the FBS head office in Russia since its office opened in April 2016. The BSI also alleges that Zaw Moe Han earned more than $75,909.30 in salary and fees while running FBS Myanmar since the office was opened.
U Win Htaik, director of the Foreign Exchange Management Department, insisted that FBS required a licence for the services it was offering in Myanmar. “The Central Bank didn’t issue any license to FBS Myanmar, so they were operating illegally,” he said.
The Securities Exchange Commission of Myanmar has also looked into the company and in late 2017 published notices in state-run newspapers stating that anyone who believed they had been cheated by FBS could submit a complaint.
SECM member U Htay Chun told Frontier that “a few traders” had submitted complaints, but didn’t elaborate.
The FBS Myanmar office did not respond to requests for comment. FBS Markets said in a statement that Zaw Moe Han had registered an affiliate account with FBS Markets and received a partner commission from the company.
The spokesperson said that in the two years the company has been operating in Myanmar it had “attained many successful and happy clients” and Zaw Moe Han had “put his whole heart into helping people understand and learn the company services” and fulfilled “all tax liabilities” in Myanmar.
“We believe and hope that in the nearest future, the highly professional and competitive legal authorities of Myanmar will declare fair-minded reason and justice so that Mr Zaw Moe Han may return home to his family,” the spokesperson said.
In the meantime, the company will continue to advertise its service to Facebook users in Myanmar, the spokesperson said.
However, since November 2017 the company’s website states that “for residents of Myanmar, Brazil, Thailand and Japan the service is provided by Parallax Incorporated … and is not provided by FBS Markets Inc.”
This is likely linked to regulations in Belize. Last year, Belize’s International Financial Services Commission told Frontier that under the terms of its licence FBS was not allowed to operate in a market without any regulations for retail forex trading (such as Myanmar).
Parallax is registered in St Vincent and Grenadines as a business but unlike FBS Markets in Belize is not licensed as a forex trading service. The country’s Financial Services Authority makes this clear on its webpage: “The Authority also does not license the activity of FOREX Trading or Brokerage and any [International Business Company] purporting to be licensed by the Authority to conduct this business activity is making a false statement.”
Asked about the change, the FBS Markets spokesperson said the company “has different legal entities for different countries, in order to comply with all license and regulations, which is why FBS operates under Parallax in Myanmar”.