Tiger Brokers faces charges in New Zealand for possible AML/CFT violations

Regulators around the world have had their work cut out for them with the recent increase in financial fraud cases, and companies that mismanage users’ funds or end up breaching local laws and regulations. The most recent example of the latter happened in New Zealand when the local regulator, the Financial Markets Authority (FMA), filed a civil lawsuit against Tiger Brokers’ NZ subsidiary.

According to the regulator, the company has violated the rules regarding anti-money laundering (AML) and countering the financing of terrorism. In its statement, published this Wednesday, December 21st, the regulator decided to seek a pecuniary penalty of NZ$900,000 from the local subsidiary of the major trading platform.

With the case now being in the hands of the court, it will be up to it to decide whether the allegations are true and how big of an amount the company will have to pay.

What did Tiger Brokers do?

The FMA shared details regarding its suspicions, stating that Tiger Brokers did not conduct customer due diligence. According to the local laws, the company has to conduct standard, enhanced, and additional customer due diligence when it comes to certain clients. If it is unable to do so for some reason, it is obligated to terminate its business relationship with these customers. Tiger Brokers allegedly did neither, according to the regulator.

Head of Enforcement at FMA, Margot Gatland, stated that the regulator’s case alleges that Tiger Brokers failed to vet its customers appropriately or respond to certain activities that are a valid cause for concern. It did not even maintain records in accordance with the rules and regulations in the country. All of these are core obligations for an AML/CFT-reporting entity, according to Gatland.

While failing to do these things was enough to cause concern, Tiger Brokers also did not report suspicious activities. The FMA has assessed that the firm’s record-keeping breaches are rather significant, and it was necessary for the regulator to react.

The FMA originally issued a warning

Gatland added that the firm’s failure to keep records directly influences the FMA’s ability to monitor compliance. As a result, the regime becomes ineffective, and it increases the risk for traders and investors, putting them and their funds in danger.

The FMA initially issued a warning to the company after first noticing its violations of AML and CFT laws, which was back in March 2020. After the move failed to make a change in the company’s way of operating, the regulator launched an investigation, and after confirming its fears, it decided to turn to the higher authority.

Gatland concluded by saying that the Tiger Brokers case shows that FMA can and will respond to misconduct promptly. It will start with a formal warning, but if this doesn’t result in the desired outcome, the regulator will continue to intervene by escalating its response to any misconduct.