06 Apr 2020
An online shares and options broker has been formally warned for its lax anti-money laundering processes.
The Financial Markets Authority (FMA) issued a formal warning to NZX-accredited broker Tiger Brokers (NZ) Limited for failing to have several adequate anti-money laundering protections in place.
It was one of seven businesses reprimanded for their anti-money laundering practices, the FMA said.
Anti-money laundering laws are designed to make it difficult for terrorists and criminals to move money around.
The FMA is responsible for monitoring around 800 businesses for anti-money laundering processes under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.
The FMA said Tiger Brokers had failed to properly identify clients, including checking relevant customer identification documents.
It had also failed to check where clients’ wealth came from, or as it put it failed to “obtain adequate source of fund or wealth information relating to high risk customers, and take reasonable steps to verify that information”.
And, it had failed to take reasonable steps to determine whether a customer or any beneficial owner, was a “politically exposed person”.
Tiger Brokers had also failed to report suspicious activity to the relevant authorities within three working days after forming a suspicion.
The FMA concluded there were reasonable grounds to believe Tiger Brokers had contravened the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.
Tiger Brokers has been ordered to prepare and submit a plan to the FMA before April 17 describing how and when it would address the issues.
“It must then complete these actions by 30 September 2020 or it will face enforcement action,” said James Greig, head of supervision at the FMA.
“Warnings are an important regulatory tool for the FMA because they can force faster change than court proceedings. In these cases, formal warnings were the most proportionate response to the conduct by the firms in question.
“A public warning is designed to send a signal that we have issues with a company, and they need to address the concerns we have raised,” he said.
“The severity of Tiger Brokers’ likely breaches meant that a public warning was necessary, especially because it is a large business that is growing fast in New Zealand.”
By Rob Stock, Stuff, 6 April 2020
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