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The Financial Markets Authority (FMA) has filed court proceedings against Tiger Brokers for allegedly violating the Anti Money Laundering and Countering Terrorism Financing (AML/CFT) Act 2009.
The FMA case asserts four causes of action against Tiger Brokers: failure to perform customer due diligence; failure to terminate an established company that is unable to do customer due diligence; failure to report suspicious activity; and failure to maintain documents in line with the Act’s criteria.
The action will move forward to a penalty case before the High Court, in which the parties would jointly request that Tiger Brokers be forced to pay a fine of $900,000. The Court will decide how much the pecuniary fine will be.
The proceedings come after the FMA warned Tiger Brokers for not having enough AML/CFT safeguards in place in March 2020.
Following the warning, the FMA launched an investigation into Tiger Brokers’ adherence to the Act, acquiring a sample of client files and other records-keeping-related documentation. The FMA came to the conclusion that Tiger Brokers’ degree of non-compliance justifies vigorous enforcement action that consists of civil monetary penalty proceedings
The FMA perceives Tiger Brokers’ record-keeping violations as substantial and widespread since they go beyond a small sample of customer files. The FMA claims that Tiger Brokers’ data were difficult to acquire and tough to translate into English.
Margot Gatland, FMA Head of Enforcement, said: “The anti-money laundering and counter financing of terrorism regime is an important pillar to maintaining the integrity of New Zealand’s financial markets, so we take non-compliance seriously. Our case alleges Tiger Brokers failed to appropriately vet customers, respond to activities that should have raised concerns, and maintain records in the manner required by the Act. These are all core obligations for an AML/CFT-reporting entity.”
It is difficult for the FMA to ensure compliance and guarantees the effectiveness of the system if records are not kept as mandated by the AML/CTF Act. “New Zealand-based AML/CFT reporting entities cannot outsource compliance obligations to third parties or rely on parent companies overseas without ensuring that they meet compliance obligations under New Zealand law,” Gatland said.
FMA Head of Enforcement stated: “This case shows the FMA can respond to misconduct promptly with an intervention, such as a formal warning, but this may not be the end of the matter, and we may escalate the response if we consider it appropriate to do so in the circumstances.”