Financial Crime World

Cyprus Police Confirm Extradition Request from Germany Amid Banking Fraud Probe

Background

The Cyprus police have confirmed that they received a request from German authorities to extradite a permanent resident of the island who was arrested last month in connection with a cross-border trading fraud investigation involving Europol.

Suspect’s Details

  • The suspect is a foreign national residing in Cyprus, taken into custody on October 6 following a European Arrest Warrant.
  • Sources suggest that the arrested individual is a German-Israeli national, who was part of an organized crime group involved in fraudulent binary options trading.

Investigation Details

  • Europol supported an operation by authorities in Cyprus, Bulgaria, Germany, the Netherlands, and Ukraine to bust an organized crime group behind a multi-country trading fraud scheme.
  • The investigation revealed that the group had lured German investors into making transactions worth at least €15 million between May 2019 and September 2021.
  • Authorities seized phones, electronic equipment, bank accounts, and data backups in connection with the investigation.

Consequences

  • The case has led to 246 criminal proceedings across 15 German federal states.
  • Two investment firms licensed under CySEC, Maxiflex Ltd and Maxigrid Ltd, have had their licenses suspended due to evidence of fraudulent activities.
  • Over 2,000 people employed in the local forex industry have lost their jobs as a result.
  • An Israeli connected to a Cyprus-based forex firm was reportedly arrested on the demand of the FBI in October.
  • The arrest is believed to be connected to a joint operation by US and Israeli authorities that resulted in 26 arrests for suspected involvement in running organized financial fraud.

Regulatory Action

  • CySEC has urged investors to check its website for a list of authorized companies, and warned that it will take appropriate action against any entity found to be engaging in unlawful activities.
  • The authority has also sought to dispel “erroneous or misleading impressions” about the industry, stating that only 5,895 people were employed by registered investment firms in Cyprus as of June this year.