A recent surge in fraudulent trading accounts has put U.S. futures brokers on high alert, with regulators reporting that scammers are using fake identities and documents to open accounts before executing risky trades and attempting fast withdrawals.

The National Futures Association (NFA) and ICE Futures U.S. have issued formal notices to brokers, citing a growing pattern of suspicious client behavior that could expose firms to financial and reputational harm.

Regulatory Alarm Over Account Fraud

Both the NFA and ICE’s Market Regulation Department say they have seen an uptick in accounts opened using falsified passports, fake addresses, or entities that don’t exist.

According to the regulator, these fake clients sometimes engaged in trading strategies that led to extreme swings in profits or losses. When that happened, they either requested immediate wire transfers of gains or ignored margin calls altogether.

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“NFA has recently become aware of several incidents where persons have opened trading accounts using falsified customer identification documents and/or made false representations regarding entities and individuals that do not exist,” the NFA mentioned.

“Once those accounts have been established, customers have engaged in trading activity that resulted in large swings in profit or loss with immediate requests to withdraw funds and/or failures to meet margin calls.”

Adding to the concern, some individuals impersonated others in interviews or failed to respond to regulatory inquiries, effectively cutting off communication once the account was flagged. In more serious instances, customers moved positions to another broker soon after opening the account, raising further red flags.

Due Diligence Gaps Under Scrutiny

To counteract these threats, brokers are urged to review and potentially strengthen their onboarding procedures. Suggestions include running more thorough background checks, verifying addresses and IDs carefully, and questioning why clients want to trade in certain markets, especially exotic or illiquid ones.

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The advisory also recommends temporarily lowering trading limits on new accounts and enhancing post-onboarding monitoring, particularly for trades that appear pre-arranged or take place in markets with low liquidity.

According to ICE, detecting “money pass” strategies, where money is essentially funneled from one account to another via coordinated trades, is a key priority.

Source: Finance Magnates