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Why does my broker require a photocopy of my credit card?

Why does my broker require a photocopy of my credit card?

When a trader wants to register on an online trading platform, some formalities are imposed. It is a question of respect towards the regulation set up by the financial authorities in order to regulate fraud and to control and protect amateur or professional traders.

Therefore, when a trader tries to open a trading account, whether at a forex broker or at a regulated binary options broker, they have to go through a complete verification process. In order to check the trading account and the identity of the trader, brokers ask that some personal documents be sent by e-mail to finalize the opening of the account.

Documents to provide for an online trading account

Most brokers all ask for the same type of documents, namely:

- An identity document: it can be a national identity card, a passport or even a driving license. The official document attesting to the identity can either be photographed or scanned before being sent to the broker. The purpose of this verification is simply to prove that the trading account has been opened in the name of the trader.

- Proof of address: several documents are allowed. This can be an invoice issued by a public service (telephone company, electricity supplier, Internet access provider for example). Tax notices and dated bank statements are also accepted.

- A scanned or photographed copy of the bank card that was used for the first deposit on the trading account. Not all brokers request this proof from their traders. If this is the case, the photocopy must of course hide some of the figures that make up the number of the credit card, its validity date and its verification code, in order to prevent this information from being used for fraudulent purposes.

All these documents are very important for the online broker to verify the trading account and the identity of its holder. It is a process that allows the trader who will invest to be protected before placing money on the financial markets. It's also a way for brokers to protect themselves. For example, a photocopy of the bank card used to open the account is a preventive measure against money laundering. All brokers that are regulated by financial authorities are under the obligation to follow certain rules and therefore to ask their customers for a copy of their Visa or Mastercard.

While some might think it is a trap, regulated online brokers are forced to check trading accounts by asking for a photocopy of the credit card. The sector is increasingly controlled to protect traders, avoid disappointments and fight effectively against money laundering. Much abuse may have occurred in the past due to lack of control, much to brokers and especially traders’ expense. In any case, it is strongly advised to be well informed before choosing an online broker, to take into consideration if it is well regulated by a financial authority to then be able to trade serenely and safely. Online trading is already a high risk job, there is no need to add stress by working with an untrusted broker.

Last Update on 14/12/18

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