Tiger Brokers, a NASDAQ-listed broker was forwarded to the civic lawsuit by the Financial Markets Authority (FMA) for what is said to be a breach of rules around anti-money laundering and countering the financing of terrorism.
As stated by the Financial markets authority, the watchdog is looking for ways to seek a pecuniary penalty of NZ$ 900,000 from the broker. However, this has not been actualized, as the financial body waits for the court to finalize its ruling on the allegations.
Among the four major violations highlighted by FMA against Tiger brokers include failure to conduct customer due diligence which includes “standard, enhanced and additional customer due diligence on certain clients.” In addition, the broker failed to terminate the business relationship with customers with malicious acts and deals.
“Our case alleges 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. These are all core obligations for an AML/CFT-reporting entity,” said Margot Gatland, FMA’s Head of Enforcement.
The Root Behind The Suing
Beyond the above-highlighted failures, the broker is also associated with suspicious activities which were never reported and negligence in keeping records as required by the local law. According to the Financial Markets Authority, record-keeping neglect was both significant and systematic.
“A failure to keep records as required by the AML/CFT Act severely hampers the FMA’s ability to monitor compliance and ensure the regime is effective,” Gatland noted.
“New Zealand-based AML/CFT reporting entities cannot outsource compliance obligations to third parties or rely on parent companies overseas without ensuring that they meet compliance obligations under New Zealand law,” Gatland added.
Before the Tiger Brokers were laid in court, the broker previously faced a warning in March 2020. The warning was initiated as a result of misconduct, where the broker was captured with inappropriate AML Protections rights. The scrutiny was henceforth extended to date.
“This case shows the FMA can respond to misconduct promptly with an intervention, such as a formal warning, but this may not be the end of the matter, and we may escalate the response if we consider it appropriate to do so in the circumstances,” added Gatland.
