Share broking service provider Tiger Brokers has been ordered by the High Court to pay $900,000 for breaching anti-money laundering laws in a case brought by the Financial Markets Authority (FMA).
The FMA says the effect of Tiger’s breaches saw $60.8 million being transacted through New Zealand’s financial system without proper checks and controls being in place. Tiger’s customer due diligence and record-keeping breaches were of the greatest magnitude, the FMA says, with customer due diligence breaches involving about 3,768 customers.
Tiger Brokers is a NZ-based subsidiary of Tiger Fintech (Singapore) PTE Ltd and provides share brokering services through an online trading platform, Tiger Trade. In late 2021 Tiger Brokers announced it had entered the Deloitte Fast 50 index with growth of 211% over three years by offering access to stock markets in Australia, China, Hong Kong, Singapore and the United States via an app with no minimum deposit and low brokerage fees.
The regulator says Tiger Brokers has admitted to; 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 Anti-Money Laundering and Countering Financing of Terrorism Act’s requirements.
The record-keeping breaches were representative of Tiger’s weak compliance approach across its business which, in the 2019-2020 year, included 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 says.
"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," FMA Head of Enforcement Margot Gatland says.
"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," says Gatland.
Tiger Brokers 'respects the court ruling'
Via a spokesman Tiger Brokers says it respects the court ruling including the $900,000 penalty.
"The company confirms that none of its employees has been separately censured as part of the civil proceedings, and there is no allegation that the company has allowed money laundering or financing of terrorism to take place. Its business in New Zealand and other global markets will not be impacted," Tiger Brokers says.
"Since the formal warning in 2020, Tiger Brokers has been fully cooperating with the FMA, and conducted significant remedial changes to reshape and rebuild its AML compliance frameworks, including increased AML compliance staffing in a New Zealand-based compliance team. The company has since successfully completed multiple external AML compliance audits and reviews."
The spokesman also says Tiger Brokers has a "zero-tolerance stance against any form of violation of applicable law and regulation in all global markets."
The FMA's investigation followed a formal warning to Tiger Brokers in 2020, with court proceedings filed last December.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.