FMA Accuses CLSA Premium of Multiple Money Laundering Law Failures

New Zealand’s FMA has accused broking and derivatives trading firm CLSA Premium New Zealand of numerous breaches of anti-money laundering laws involving $50 million of transactions.

June 23 2020 | AtoZ Markets – New Zealand’s Financial Markets Authority (FMA) today announces that it has launched civil High Court proceedings against CLSA Premium New Zealand Limited (CLSAP NZ) for alleged breaches of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.

FMA accuses CLSAP Premium of $50m anti-money laundering breaches

CLSAP NZ, formerly KVB Kunlun New Zealand Limited, is the local subsidiary of the Hong Kong parent, CLSA Premium Limited. CLSAP NZ provides various financial services, including broking, financial advice, and derivatives.

The FMA alleges that CLSAP NZ failed on numerous occasions to conduct sufficient customer due diligence and enhanced customer due diligence, to terminate business relationships, to report suspicious transactions, and to keep records in accordance with the AML/CFT Act. The FMA also claims that these alleged breaches are representative of CLSAP NZ’s general approach to compliance with its obligations under the AML/CFT Act over the time that they occurred. The representative transactions involve nearly $NZ50 million and occurred between April 2015 and November 2018.

The directors of CLSAP NZ during the relevant times were Rongjun (June) Zhang, Songyuan Huang (Benny Wong), Stefan Liu, Robert Manwarring Noakes and Richard Clive Pearson. The directors are not parties to the proceedings.

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Nick Kynoch, FMA General Counsel, said:

“The anti-money laundering legislation is a cornerstone to protecting the integrity of New Zealand’s financial system and it’s imperative that financial services firms ensure they are compliant. The regime has been in place since 2013 and CLSAP’s alleged breaches are serious so it is appropriate for the FMA to take a strong regulatory response. CLSAP NZ needs to be held to account and our approach sends an important message of deterrence to the industry.”

FMA is seeking a pecuniary penalty against CLSAP NZ

Under the AML/CFT Act, reporting entities need to have a written risk assessment, have a compliance program, and designate a compliance officer to administer and maintain the program.

The FMA claim, filed in the High Court at Auckland, is seeking a pecuniary penalty against CLSAP NZ and costs. The maximum pecuniary penalty for the alleged breaches is $2 million for a company.

The FMA is also one of three supervisors under the AML/CFT Act, along with the Reserve Bank of New Zealand and the Department of Internal Affairs. The regulator, however, currently supervises around 800 reporting entities that need to comply with the Act. The FMA has licensed some of these entities.

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