The Financial Markets Authority says it has issued a formal warning to NZX-accredited broker Tiger Brokers (NZ) Ltd for failing to have several adequate anti-money laundering protections in place.

The FMA says it has also privately warned six other businesses for their anti-money laundering practices, mainly due to late auditing of their systems and controls.

It says it identified the issues with Tiger Brokers and the other companies as part of its ongoing monitoring of around 800 businesses that report to the regulator under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009.

In the FMA’s view, Tiger Brokers had failed to:

• Adequately conduct enhanced and ongoing customer due diligence where required.
• Adequately verify relevant customer identification documents.
• Obtain adequate source of fund or wealth information relating to high risk customers, and take reasonable steps to verify that information.
• Report suspicious activity to the relevant authorities within three working days after forming a suspicion.
• Take reasonable steps to determine whether a customer or any beneficial owner, is a politically exposed person.

The FMA says it concluded there were reasonable grounds to believe the business had contravened the Act.

Tiger Brokers must prepare and submit a plan to the regulator before 17 April 2020 describing how and when it will amend the issues to become compliant. It must then complete these actions by 30 September 2020 or it will face enforcement action.

Formal warnings to six other firms

The FMA says it has issued formal warnings to six other firms after finding:

• Four failed to have their AML risk assessment and programme audited in a timely manner;
• One failed to provide an audit of its AML risk assessment and programme;
• One failed to have an AML programme in place, undertake a risk assessment, and designate an employee to administer and maintain the programme. This entity has undertaken remedial action due to the nature and extent of its breaches.

“We decided not to name the other six businesses after considering the proportionate regulatory response. All of these firms in breach were either small businesses or individuals, and they are cooperating with the FMA and taking steps to become compliant," FMA Head of Supervision, James Grieg, says.