FMA Sues Tiger Brokers for CFT/AML Breaches

The Financial Markets Authority (FMA) of New Zealand has brought a civil lawsuit against the local subsidiary of Tiger Brokers, an online trading platform. FMA alleged that Tiger Brokers breached rules around Countering the Financing of Terrorism (CFT) and anti-money laundering (AML).

On Wednesday, the financial market regulator declared they intend to impose a hefty fine of NZ$900,000 on Tiger Brokers (NZ) Limited. However, if the court verifies these allegations, the court will decide the sum that the broker must pay.

The FMA accused Tiger Brokers of violating four Anti-Money Laundering/Counter Financing Terrorism rules. Specifically, the trading platform failed to perform due diligence on its customers – standard, enhanced, and additional. It also could not terminate business relationships with clients for which it could not execute customer checks.

Margot Gatland, FMA’s Head of Enforcement, has alleged that Tiger Brokers neglected to perform their due diligence and respond appropriately to activities that should have raised issues. Additionally, they failed to uphold essential records needed by the Act – all necessities for an AML/CFT-reporting entity.

‘Systemic and Substantial’ shortcomings plague Tiger Brokers

What’s more, Tiger Brokers neglected to report suspicious activities and comply with record-keeping regulations stipulated by state law. As reported by FMA, these document maintenance nonconformities were “systemic and significant.”

Gatland emphasized that failing to document records as indicated by the AML/CFT Act has a detrimental effect on the FMA’s capacity to oversee compliance and guarantee that its regulations are effective. He continued, noting that New Zealand-based entities mandated with AML/CFT reporting cannot outsource their accountability obligations to foreign companies without confirming they meet New Zealand legal requirements.

After the FMA’s formal warning in March 2020 due to inadequate AML measures, they took enforcement action against Tiger Brokers. Additionally, a further investigation into the broker began after their reprimand.

Gatland asserted that this case demonstrates the FMA’s capacity to swiftly intervene with a warning and emphasized that they are prepared to take more extreme measures if necessary.