New Zealand’s FMA Orders Tiger Brokers to Pay $900k for AML/CFT Breaches

<p>The
Auckland High Court has ordered Tiger Brokers (NZ) Limited, a New Zealand-based
subsidiary of a popular <a href="https://www.financemagnates.com/terms/r/retail-trading/">retail trading</a> broker from Singapore, to pay $900,000 for
violations of the Anti-Money Laundering and Countering Financing of Terrorism
(AML/CFT) Act. The proceedings were brought by the Financial Markets Authority
(<a href="https://www.financemagnates.com/tag/fma/" target="_blank" rel="follow">FMA</a>), the local regulatory market watchdog.</p><p>Tiger Brokers Admits Four
Breaches</p><p>The FMA's
case was based on four causes of action that Tiger Brokers admitted to. They
include failing to conduct adequate customer due diligence, to terminate
existing business relationships when it was unable to conduct customer due
diligence, to report suspicious activities and to keep records as required by
the AML/CFT Act.</p><p>The effect
of these breaches was that from April 2019 to January 2020, approximately NZD 60.8
million was transacted through New Zealand's financial system without
appropriate checks and controls. The firm's customer due diligence and
record-keeping failures were most significant, affecting at least 3,768
customers.</p><p> “The judgment reinforces the importance of
these laws in maintaining the integrity of New Zealand’s financial markets; non-compliance
is a serious matter,” Margot Gatland, the Head of Enforcement at FMA, stated. “The
court found 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.”</p><p>This
is a summary of a case that <a href="https://www.financemagnates.com/forex/fma-takes-tiger-brokers-to-court-for-amlcft-breaches/" target="_blank" rel="follow">began in late 2022</a>. As Finance Magnates
reported, New Zealand's financial regulator then sued the Singapore broker for
AML/CFT violations. The penalty imposed by the court corresponds to the one requested
by the FMA more than six months ago. However, the FMA drew attention to the
inaccuracies much earlier, sending an official warning back <a href="https://www.financemagnates.com/forex/brokers/new-zealands-fma-flags-tiger-brokers-for-weak-aml-protections/" target="_blank" rel="follow">in 2020</a>.</p><p>Compliance Failures by
Tiger Brokers</p><p>The
company's record-keeping violations reflected its overall weak <a href="https://www.financemagnates.com/terms/c/compliance/">compliance</a>
approach. In the 2019-2020 AML/CFT reporting year, it had between 69,705 and
126,230 customers and transactions totalling between $3.6 billion and $35.2
billion.</p><p>The FMA
investigation into these breaches commenced after a formal warning was issued
to Tiger Brokers in April 2020.</p><p> “Part 2 of the Act plays an important role in
New Zealand’s regulatory landscape,” Justice Gault commented in his judgment. “Its
purposes are to detect and deter money laundering and the financing of
terrorism; maintain and enhance New Zealand’s international reputation; and to
contribute to public confidence in the financial system.” </p><p>While the
FMA's case relates to Tiger Brokers’ AML/CFT policies and obligation to file
suspicious activity reports, it does not allege that Tiger Brokers has allowed
money laundering or financing of terrorism to take place.</p><p>For Tiger
Brokers, this is not the only regulatory action recently. The broker, who
introduced the industry's <a href="https://www.financemagnates.com/forex/tiger-brokers-launches-industrys-first-ai-investment-assistant-tigergpt/" target="_blank" rel="follow">first AI investment assistant</a>, has also struggled with problems <a href="https://www.financemagnates.com/forex/futu-and-up-fintech-face-regulatory-action-in-china/" target="_blank" rel="follow">in China</a>. In December 2022, the China Securities
Regulatory Commission (CSRC) threatened to shut down the operations of two
brokers: Futu and Up Fintech (operating as Tiger Brokers). The reason
was alleged unlawful securities business within the country.</p>

This article was written by Damian Chmiel at www.financemagnates.com.