The Financial Markets Authority (FMA) has filed civil court suit against local business arm of Tiger Brokers for alleged breaches of anti-money laundering and countering the financing of terrorism rules.
The New Zealand watchdog is seeking a pecuniary penalty of $900,000, however, the court will have the final decision on the penalty.
The financial markets regulator alleges that Tiger Brokers (NZ) Limited has made four AML/CFT rules violation. The retail trading platform allegedly failed to conduct customer due diligence which includes “standard, enhanced and additional customer due diligence on certain clients.” Furthermore, the company failed to terminate business relationships with customers for whom it could not run due diligence checks.
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.
Moreover, the broker reportedly did not disclose suspicious activities and failed to keep records in accordance with the requirements of the law. The FMA called these breaches “systemic and significant” and Tiger Broker’s lapses warrant “strong enforcement action.”
The regulator filed a formal warning to Tiger Brokers in March 2020 for failures in several AML/CFT protections and opened an investigation into the broker after that.
Margot Gatland, FMA Head of Enforcement, said:
A failure to keep records as required by the AML/CFT Act severely hampers the FMA’s ability to monitor compliance and ensure the regime is effective. 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.
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.
