5 Best Alternatives to No-KYC Forex Brokers for 2023
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A no-KYC forex broker refers to a forex (Foreign Exchange) brokerage firm that doesn’t conduct the standard Know Your Customer (KYC) process.
KYC is a term used by businesses to describe the process of verifying the identity, suitability, and risks involved with maintaining a business relationship. It’s a process that helps to prevent financial fraud, money laundering, and terrorist financing.
If you choose to trade with a forex broker without KYC, you are at risk of being scammed.
In fact, even though they act properly towards clients, it is dangerous because these brokers could run away with the money at any given moment, and clients have no protection whatsoever in case of fraud.
For this reason, we don’t suggest you to open an account with brokers without KYC, but we give you the best alternatives.
What are the best alternatives to No-KYC forex brokers?
Below our curated list of the alternative to forex brokers without KYC, with details of features and characteristics.
No KYC forex brokers: here’s why it’s risky to use them
The main reason why many traders want a forex broker without KYC is to trade anonymously and to trade under more “permissive” trading conditions.
However, forex brokers that do not require KYC are not regulated by any entity, and this means that your funds and your data won’t be protected.
No KYC forex brokers do not guarantee:
- Negative Balance Protection
- Protection in case of fraud
- Money insurance
- Data protection
Negative balance protection is important because it ensures your balance never goes below 0, so you will never owe money to the brokers.
If the broker you are using commits a crime, for example using the trader’s money as their own, you can’t be protected.
Transparency is key when choosing a forex broker, and no-KYC brokers can potentially manipulate their prices to make you lose money.
Money Insurance is also important because if you are damaged by the broker, you cannot ask for a refund.
Even though no-KYC forex brokers don’t ask for your documents, they can still sell your data to third parties. This is called front running, where the brokers sell the data of their clients’ orders to big corporations, liquidity providers, or other forex market counterparties. This practice is illegal in most countries.
How to verify your trading account
To verify your trading account, you must provide the following information to the forex broker:
- Proof of identity
- Proof of address
- Answer some questions about your market knowledge
- Answer some questions about your occupation and personal finances
- Answer some questions about investment and trading strategies
Completing the KYC is not a hard process, and we encourage traders to trade with regulated brokers only.
If you want to know more about ID verification, read this article about KYC.
Why do most forex brokers require KYC?
Forex brokers require ID verification to comply with international AML laws. Some brokers also use KYC information to get to know customers better and understand their level of knowledge about the assets on the platform.
Forex brokers might prohibit inexperienced users from depositing money and/or giving them access to high-risk products.
This doesn’t happen with forex brokers without KYC. The most famous are:
- Evolve Markets
- Turnkey Forex
DISCLAIMER: This list was made for educational purposes. We do not suggest you open an account with any of these brokers. It would be more appropriate for you to choose the best forex brokers around.
What use do forex brokers make of clients’ details?
Regulated brokers use the information provided by their customers to ensure that deposits and withdrawals are regular, to understand how skilled the trader is (if required by local regulation), and to manage their own internal risk.
If the broker is regulated, this information will never be sold or disclosed to third parties except when requested by law enforcement or IRS-related entities.
When the trader closes his or her trading account, this information will typically be kept for 5 years and then be destroyed. For more information on account closing you can read this article.
Forex brokers typically hold four types of information about their traders:
- Tax information
- Private information
- Trader profitability information
- Information about the trader’s activity
Tax information: this includes the amount of money in the traders’ account, as well as deposit and withdrawal activity related to the account.
Private information: this involves traders’ personal details, along with phone numbers and/or registration email. This is the data that is most commonly sold to third parties.
Trader profitability: this is used internally to manage risk from counterparty activity. In fact, most forex brokers may decide to delegate risk to their liquidity providers, without this decision impacting the trader.
Trader’s activity: Information about trader activity is used internally to better manage business risk and to potentially prevent a lack of liquidity. This information is highly coveted by other forex market players because it allows them to predict the market and perform arbitrage actions. Although it is illegal to provide this information to third parties, unregulated brokers may do so.
Why do traders look for fx brokers without KYC?
Most forex traders will look for no KYC forex brokers for the following reasons:
- Privacy concerns
- Fast registration
- Permissive regulatory environments
- Tax evasion
- Money laundering
Privacy Concerns: when you register with KYC forex brokers, you have to provide a number of documents to the broker. Some traders are afraid that their information will be misused, or stolen by potential data breaches.
Fast registration: KYC verification requires more or less a week to be completed. Some traders just want to start trading quickly, and that’s the reason why they prefer brokers without verification.
Permissive regulatory environments: forex brokers that do require ID verification, are often regulated and overseen by financial watchdogs that require them to abide by strict laws. For instance, UK forex traders are limited to 1:30 leverage. If a UK trader wants higher leverage they have to register with a forex broker regulated outside the UK but these offshore brokers won’t necessarily accept him as a client. No-KYC brokers, on the other hand, would accept him without problems and give him high leverage to trade with.
Tax evasion & money laundering: if some traders want to trade with unregulated brokers for privacy reasons or for personal preference, others might want to use them for illegal reasons. One of them is tax evasion. These forex brokers are often located in tax havens, where international authorities might have a hard time checking the financial information of the trader.
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