Saturday, November 27

CLSA Premium NZ will pay $ 770k for breach of obligations as a financial services provider

Financial services company CLSA Premium NZ (CLSAP NZ) was ordered to pay $ 770.00 for violating anti-money laundering rules.

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The Financial Markets Authority (FMA) filed proceedings against the Hong Kong-owned derivatives issuer, formerly known as KVB Kunlun, alleging that the company failed to fulfill its duties under anti-money laundering and anti-money laundering rules. terrorism (AML / CFT).

The FMA alleged that CLSAP NZ did not carry out adequate controls on its clients, did not keep adequate records and did not report suspicious transactions or cut business ties with some clients between 2015 and 2018.

The violations covered nearly $ 50 million worth of transactions, $ 40 million of which were related to deposits made by two people.

In May, CLSAP NZ admitted the violations, but disagreed with the FMA on the fine it would have to pay, which could amount to $ 7 million.

There was no suggestion that the company engaged in money laundering.

In Auckland High Court in July, the FMA asked for a fine of around $ 1.5 million, but noted that after various discounts it would be reduced to $ 1.2 million.

However, CLSAP NZ said that a fine of $ 420,000 was more appropriate.

In her ruling published Friday night, Judge Rebecca Edwards said the company had been ordered to pay $ 770,000.

The judge said that the fact that CLSAP NZ did not obtain any evidence of the source of wealth or funds for some transactions was “particularly concerning.”

Judge Edwards said that although the company had AML / CFT policies, the CEOs interfered with compliance, the resignation of compliance officers due to disagreements with the directors, and CLSAP NZ’s willingness to accept “suspicious information” to withhold. business.

The ruling says a director asked an employee to resign and told them they needed someone “more docile” as their chief compliance officer.

“Together, these characteristics suggest that [CLSAP NZ’s] the failure to comply with due diligence was not inadvertent; It did not arise from any misunderstanding regarding your obligations; or occur as a result of wrong advice, “Judge Edwards said.

“I am satisfied that this sanction accurately reflects the seriousness of the infractions and reflects the principles of deterrence and denunciation.”

Karen Chang, chief enforcement officer at the FMA, the ruling sent a strong message that there are serious consequences for companies that choose to prioritize profits over AML / CFT requirements.

“It’s critical that companies take their compliance obligations seriously, making sure they not only have the right programs in place, but that their staff follow them.”

CLSAP NZ President David Wallace said he accepted the sanction and had made far-reaching changes in the past two years to improve compliance within the company.

He said the company had appointed a new board and a new management team, which had completely changed the culture of the company.

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