CySEC completely suspended AFX Capital Markets Ltd’s Cyprus Investment Firm (CIF) licence on 19 July 2019. The licence was not merely paused temporarily: CySEC later withdrew it following a Board decision dated 19 July 2021, and its former-firms register now lists AFX Capital Markets Ltd, licence 119/10, as “Withdrawn.”
The case involved concerns about the safeguarding of client funds, followed by an investigation, an Investor Compensation Fund process and sanctions against directors and auditors. It is also important to distinguish the Cypriot company from its separate UK-related entity, AFX Markets Limited.
Why CySEC suspended AFX’s licence
CySEC said it suspected that AFX Capital Markets might not have continuously complied with the organisational requirements attached to its authorisation. The concerns related specifically to the safeguarding of client funds under:
- Section 71(6)(c) of Cyprus’s Investment Services and Activities and Regulated Markets Law of 2017;
- Section 10(1) of CySEC Directive DI87-05, covering the withdrawal and suspension of authorisation;
- Section 22(1) of the 2017 Law; and
- Section 17(9) of the 2017 Law, together with paragraphs 4, 6 and 9 of Directive DI87-01.
CySEC described the matter as suspicions of an alleged violation and possible non-compliance. Its announcement did not make a final finding that AFX had committed fraud, misappropriated money or had a particular quantified shortfall.
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The regulator said the suspected failures created risks for the protection of clients and investors and threatened the orderly operation and integrity of the market. AFX was given 10 days to take corrective action.
What the suspension prevented AFX from doing
While the suspension was in force, AFX was prohibited from:
- Providing or carrying out investment services or activities.
- Entering into business transactions with any person or accepting new clients.
- Advertising itself as an investment-services provider.
The suspension did not prevent every action involving existing customers. Subject to client instructions, AFX could complete its own transactions and existing client transactions already before it. It could also return client funds and financial instruments. CySEC expressly stated that those actions would not breach the relevant provision of Directive DI87-05.
CySEC’s later findings about missing client money
On 1 November 2019, CySEC said its investigation was still ongoing and again referred to possible non-compliance with client-money safeguarding requirements. It also said AFX could not provide the Unique Reference Number normally needed to complain to the Cyprus Financial Ombudsman. As a result, AFX clients were allowed to submit complaints without a URN.
On 20 December 2019, CySEC said information collected during the investigation suggested that a “material amount of client funds” was missing. However, it expressly said that it had not reached a decisive conclusion about the size of the deficit.
That distinction matters. The available CySEC notice does not establish a specific missing amount, and it does not say that AFX stole or misappropriated a particular sum. Figures associated with the separate UK administration should not be presented as AFX Capital’s confirmed deficit.
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Investor Compensation Fund process
On 17 March 2020, CySEC decided that the Investor Compensation Fund (ICF) should begin the compensation-payment process for covered AFX clients. The decision was announced on 27 March 2020. CySEC said AFX’s financial circumstances meant that the firm was unable to meet obligations arising from investors’ claims and had no early prospect of doing so.
The ICF announcement set 30 September 2020 as the deadline for claims. Applications could be made online through CySEC or submitted in writing to the ICF at:
Investor Compensation Fund
19 Diagorou Street, 1st floor
1097 Nicosia, Cyprus
Applicants were expected to provide evidence such as:
- identification and contact details;
- AFX client or investment-account information;
- the client agreement;
- the amount claimed;
- account statements and evidence of deposits;
- relevant correspondence; and
- a description of the facts and supporting evidence.
The process did not mean every AFX customer would automatically receive compensation. The ICF stated that a valid claim was an essential condition for payment and that it could request additional evidence.
The licence was eventually withdrawn
The 2019 suspension was not the final regulatory outcome. CySEC’s Board decided on 19 July 2021 to withdraw AFX’s CIF authorisation, with the decision announced on 23 December 2021. The former-firms register lists the company as AFX Capital Markets Ltd, licence 119/10, with status “Withdrawn.”
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CySEC said AFX no longer met the conditions under which its authorisation had been granted. The decision also referred to failures involving:
- the board of directors;
- the suitability of shareholders;
- organisational requirements; and
- the serious infringement of section 25(3)(a), concerning information provided to clients.
The cited legal provisions included sections 9(3), 9(9) and 9(16) on board requirements, section 11(1)(b) on shareholder suitability, and sections 17(2), 17(5)(a), 17(5)(b) and 17(9) on organisational requirements.
Fines and bans involving directors
CySEC also found that named board members had failed to define and effectively oversee governance arrangements intended to ensure AFX was managed effectively and prudently, while promoting market integrity and client interests.
| Individual | Role | Administrative action |
|---|---|---|
| Manuela Mazzacco | Executive director | €100,000 fine and five-year ban from management functions in CIFs |
| Andreas Lianos | Executive director | €50,000 fine and three-year ban from management functions in CIFs |
| Costas Georgiades | Non-executive director | No administrative fine or measure |
| Elena Economides Demetriou | Non-executive director | No administrative fine or measure |
| Andreas Papagapiou | Non-executive director | No administrative fine or measure |
Fines involving auditors
CySEC imposed a €100,000 fine on BDO Ltd and a separate €100,000 fine on Anthimos, Leonidou and Partners Ltd.
The sanctions concerned the correctness, completeness and accuracy of reports submitted under the former 2007 investment-services law about measures taken to protect client money. The decision identified BDO reports for the years ending 31 December 2014, 2015 and 2016, and a report by Anthimos, Leonidou and Partners for the year ending 31 December 2017.
AFX Capital Markets and AFX Markets were different companies
A common source of confusion is the relationship between AFX Capital Markets Ltd and AFX Markets Limited. They were separate legal entities.
The UK Financial Conduct Authority described AFX Capital as the Cyprus-based parent of AFX Markets. The FCA said AFX Markets acted as an intermediary, while trades were contractually executed by AFX Capital, and that most client money was held with AFX Capital in Cyprus.
The FCA applied to place AFX Markets into special administration, and the High Court appointed special administrators on 27 August 2019. The FCA referred to approximately 1,200 customers and about £7.5 million of client money according to figures supplied by the firm. Those figures belong to the UK special-administration case; they are not proof of a confirmed AFX Capital client-money deficit.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchWhat compensation protection applied?
The UK Financial Services Compensation Scheme (FSCS) said it could consider eligible claims from customers of AFX Markets Ltd, the UK-authorised firm. It also stated that FSCS protection did not extend to claims against AFX Capital Markets Ltd.
Therefore, a customer should first identify the legal entity named in the account agreement, statements and trade documentation. Being connected to the AFX group did not by itself establish FSCS eligibility. For AFX Capital clients, the relevant compensation route described by CySEC was the Cyprus Investor Compensation Fund process, subject to eligibility and a valid, evidenced claim.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Earlier CySEC settlement
Before the suspension, CySEC announced a separate €50,000 settlement with AFX on 28 September 2018, following a Board decision dated 17 September 2018. It concerned possible breaches of the former 2007 investment-services law, including the requirement for a CIF to continue meeting the conditions of its authorisation.
That settlement should not be confused with the complete licence suspension announced on 19 July 2019.
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What former AFX clients should verify
- Check the contracting entity. Look for AFX Capital Markets Ltd or AFX Markets Ltd in your agreement and account records.
- Separate balances from claims. Gather statements, deposit records, withdrawal requests, trade confirmations and correspondence.
- Do not rely on unverified deficit figures. CySEC said a material amount appeared to be missing but did not publish a final quantified deficit in the cited notice.
- Check the relevant compensation scheme. FSCS treatment concerned eligible customers of the UK entity, while the Cyprus ICF process concerned covered clients of AFX Capital.
- Use official regulator records. The CySEC former-firms register and the FCA and FSCS pages are more reliable than broker directories or forum claims.
For a historic claim or legal dispute, the appropriate regulator, compensation fund or qualified adviser can confirm whether any deadline, appeal route or evidential requirement still applies.
Sources: CySEC suspension notice; CySEC client announcement; CySEC client-funds update; CySEC ICF decision; ICF claims notice; CySEC withdrawal decision; FCA information on AFX Markets; FSCS AFX Markets information.
The Bottom Line
AFX Capital Markets Ltd’s CIF licence 119/10 was completely suspended by CySEC in July 2019 over suspected failures involving client-money safeguards. The authorisation was later withdrawn, not restored. CySEC subsequently referred to a material amount of missing client funds and opened an ICF process for covered clients, but the cited notices did not establish a precise deficit or a finding of theft. Customers should distinguish AFX Capital Markets from AFX Markets and verify which legal entity held their account before assessing compensation options.
FAQ
Is AFX Capital Markets’ licence still suspended?
No. The suspension began on 19 July 2019, but CySEC later withdrew the CIF authorisation following its 19 July 2021 Board decision. CySEC’s former-firms register lists licence 119/10 as withdrawn.
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What was the alleged regulatory problem?
CySEC initially suspected possible non-compliance with organisational requirements for safeguarding client funds. Later findings also concerned board governance, shareholder suitability, organisational requirements and information provided to clients.
Did CySEC confirm the exact amount of missing client money?
No. CySEC said information suggested that a material amount of client funds was missing, but it had not reached a decisive conclusion about the size of the deficit in the cited announcement.
Are AFX Capital clients covered by the FSCS?
Not simply because they used the AFX group. FSCS stated that it could consider eligible claims from customers of the UK entity, AFX Markets Ltd, but did not extend protection to claims against AFX Capital Markets Ltd.
Could AFX clients claim through the Cyprus Investor Compensation Fund?
CySEC started an ICF compensation process for covered AFX clients in 2020. Payment required a valid claim supported by evidence; coverage was not automatic for every customer. The published deadline for that process was 30 September 2020.
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