New Zealand FMA Warns Tiger Brokers for Weak AML Protections

The FMA has issued an official warning to Tiger Brokers and six other entities for failing to put anti-money laundering protections in place.

07 April, 2020 | AtoZ Markets –  The New Zealand Financial Markets Authority (FMA) announced that it issued a warning to Tiger Brokers (NZ) Limited for weak anti-money laundering (AML) protections. Tiger Brokers is an online investment brokerage. It is also an accredited New Zealand Stock Exchange (NZX) participant firm. 

Beside Tiger Brokers, the New Zealand authority has also warned six other companies for their AML practices. The regulatory authority has not yet published the name of these entities. However, the issues are the late audit of their systems and controls, as well as insufficient documentation and due diligence.

Tiger Brokers Didn’t Adequately Verify Customers

The FMA discovered the AML problems of these companies as part of its ongoing monitoring of around 800 companies. That report to the regulatory authority under the AML/CFT act. The FMA has identified five critical issues regarding the Tiger Brokers processes. According to the statement, Tiger Brokers did not:

  1. Adequately conduct ongoing customer due diligence (CDD), where applicable.
  2. Adequately check customer identification documents.
  3. Obtain an adequate source of information on the funds or assets of high-risk clients and take reasonable steps to verify this information.
  4. Report any suspicious activity to the competent authorities within three working days of the suspicion.
  5. Take reasonable steps to determine whether a client or beneficial owner is an exposed person.

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The FMA also said, “there is reasonable evidence to suggest that Tiger Brokers has violated AML/CFT act”. Following the regulator’s conclusions, the broker must submit a plan to the FMA before 17 April, 2020. In this plan, the company must indicate how it will resolve the problems identified to comply with the law. It have until 30 September to implement these measures or deal with enforcement measures, according to the statement. James Greig, chief of supervision at the FMA, commented:

“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. The issues were wide-ranging and weren’t minor or technical, meaning there was potential for immediate and ongoing damage to the integrity of our financial markets.”

According to Greig, the AML act has been in place for some time, and the FMA also expects companies to be aware of their obligations.

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