Know Your Customer (KYC) procedures are a standard regulatory requirement for brokers. They are meant to verify client identities and protect against fraud and money laundering. However, an increasingly abusive tactic is when a broker creates a fake multi-tier KYC level structure. In this scam, brokers invent unnecessary “KYC levels” and force clients through endless verification hurdles, often to delay or block withdrawals unfairly. Recognising this behaviour is crucial to defending your rights and protecting your funds.

Why Would a Broker Create a Fake Multi-Tier KYC System?

Normally, KYC involves verifying your identity (passport or ID), proof of address, and sometimes proof of funding. When a broker creates a fake multi-tier KYC level structure, it usually happens because:

• Delaying or blocking withdrawals: Each new KYC level creates a new excuse to deny or delay withdrawal requests.
• Frustrating profitable traders: Winning clients are forced to complete endless paperwork to access their money.
• Protecting broker liquidity: By tying up client funds in KYC “processing,” brokers improve their cash flow at the client’s expense.
• Reducing regulatory accountability: Brokers pretend that ongoing KYC reviews are part of normal procedures to avoid complaints about withdrawal delays.
• Pressuring clients to abandon withdrawals: The more painful the process, the more likely traders are to give up chasing their funds.

Genuine KYC requirements are straightforward and completed once during account opening.

The Risks of Fake KYC Tiers

Endless withdrawal delays:
Traders may spend weeks or months submitting documents without accessing their funds.

Exposure to personal data misuse:
Submitting excessive personal documents increases the risk of identity theft or data leaks.

Loss of profits or even full account balance:
Traders unable to meet invented KYC demands may have their accounts frozen indefinitely.

Severe loss of trust:
A broker using a fake multi-tier KYC level structure demonstrates clear intent to obstruct client rights.

Potential regulatory breaches:
Regulators like the Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) require brokers to apply KYC fairly and transparently.

Signs That a Broker Is Using Fake KYC Levels

New KYC stages only after a withdrawal request:
You are told to complete extra KYC procedures suddenly after requesting a payout.

No disclosure of KYC tiers at account opening:
The broker never mentioned multiple KYC stages when you first registered.

Vague or shifting document demands:
Support keeps asking for different documents without explaining what is missing or wrong.

Unreasonable verification requests:
You are asked for notarised copies, videos, live selfies holding IDs, or social media profiles without clear justification.

Withdrawal approval tied to “final KYC level”:
Funds are withheld pending an undefined or ever-changing “final” verification stage.

What to Do If Your Broker Invents Fake KYC Levels

Request a full KYC policy in writing:
Demand the broker provide their official KYC procedure document.

Submit formal complaints immediately:
Do not waste time — escalate your complaint internally as soon as extra KYC demands arise.

Save all communications and document requests:
Keep records of every step to prove the broker’s bad-faith behaviour.

Report to the regulator:
If your broker is regulated like Intertrader, AvaTrade, TiBiGlobe, Vantage, or Markets.com, escalate the issue to the relevant authority.

Withdraw available funds promptly:
If your account is not yet fully blocked, remove whatever balance you can immediately.

Warn other traders:
Post factual accounts of your experience on independent trading forums to protect others.

How to Avoid Brokers That Abuse KYC Processes

Choose brokers regulated by top authorities:
Regulated brokers follow clear, standardised KYC procedures without unnecessary barriers.

Check KYC policies before depositing:
A genuine broker will list their required documents clearly upfront.

Start with small deposits:
Test the broker’s withdrawal process early to verify their true approach to KYC.

Stay alert for red flags after account funding:
Sudden, undocumented verification demands after you become profitable signal trouble.

Be prepared to escalate quickly:
The longer you delay, the harder it becomes to recover funds trapped behind fake KYC barriers.

Conclusion

When a broker creates a fake multi-tier KYC level structure, it is a blatant tactic to delay, frustrate, and block client withdrawals under false pretences. Traders must demand clear procedures, document every step, and escalate to regulators at the first sign of abuse to protect their funds.

Learn how to defend your trading rights, spot abusive broker practices early, and build strong trading resilience by joining our Trading Courses. Stay informed, stay protected, and ensure your trading success is never compromised by unfair KYC tactics.