The Auckland High Court has ordered Tiger Brokers (NZ) Limited to pay $900,000 for breaching the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (the Act), in proceedings brought by the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko.
The FMA case rested on four causes of action, that Tiger Brokers has admitted to, including:
- Failing to conduct customer due diligence (including standard, enhanced and additional customer due diligence on certain clients)
- Failing to terminate an existing business relationship with any customer where it was unable to conduct customer due diligence
- Failing to report suspicious activities; and
- Failing to keep records in accordance with the Act's requirements.
The effect of Tiger's breaches was that, between April 2019 and January 2020, approximately $NZD60.8m was transacted through New Zealand's financial system without proper checks and controls in place. Tiger's customer due diligence and record-keeping breaches were of greatest magnitude - the former extended to a least 3,768 customers.
The record-keeping breaches were representative of Tiger's weak compliance approach across its business which, in the 2019-2020 AML/CFT reporting year, comprised between 69,705 and 126,230 customers and transactions to a gross total value of between $3.6 billion and $35.2 billion.
The FMA investigation into these breaches commenced following a formal warning issued to Tiger Brokers in April 2020.
In his judgment, Justice Gault said: "Part 2 of the Act plays an important role in New Zealand's regulatory landscape. 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."
Margot Gatland, FMA Head of Enforcement, said: "The judgment reinforces the importance of these laws in maintaining the integrity of New Zealand's financial markets; non-compliance is a serious matter. 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. These are all core obligations for an AML/CFT-reporting entity.
"This case demonstrates that the FMA can and will use a wide range of tools to deal with a firm's approach to compliance, both to stop immediate harm continuing, and where the misconduct is serious, take stronger enforcement action through the courts.
"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. 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."
Tiger Brokers is the New Zealand-based subsidiary of Tiger Fintech (Singapore) PTE Limited and provides share brokering services through an online trading platform, Tiger Trade.
