Tiger Brokers has been issued with a formal warning from the FMA for not having the right anti-money laundering protections in place, and six other businesses have also been privately warned about their anti-money laundering practices.
The issues are mainly around the late auditing of their systems and controls, along with inadequate documentation and due diligence.
Tiger Brokers is an online investment brokerage and an accredited New Zealand Stock Exchange (NZX) participant firm.
The FMA identified five key issues with Tiger Brokers’ processes. These included a failure to conduct proper due diligence, verify customer ID documents, obtain solid source of wealth information in relation to high-risk customers, report suspicious activity to the relevant authorities and determine whether a customer is a politically exposed person.
The FMA says there is reasonable evidence to suggest that Tiger Brokers has contravened the Anti-Money Laundering and Countering Financing of Terrorism Act.
Tiger Brokers now has until 17 April to inform the regulator of the changes it will make to become compliant. If it fails to follow through with the plan by September, it will face further action.
Commenting on the case, FMA head of supervision James Greig 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. 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.”
“Warnings are an important regulatory tool for the FMA because they can force faster change than court proceedings,” Greig added.
“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.”
Greig said that the legislation around money laundering has been in place for some time, and the FMA expects businesses to be aware of their obligations.