FMA files court proceedings against Tiger Brokers, alleging AML/CFT Act breaches, says the record-keeping breaches are systemic and significant

The following is a press release announcement from the FMA.

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has filed civil High Court proceedings against Tiger Brokers (NZ) Limited for allegedly breaching the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (the Act). 

The FMA case alleges four causes of action, relating to Tiger Brokers: 

1. Failing to conduct customer due diligence (including standard, enhanced and additional customer due diligence on certain clients); 
2. Failing to terminate an existing business relationship with any customer in respect of whom it was unable to conduct customer due diligence; 
3. Failing to report suspicious activities; and 
4. Failing to keep records in accordance with the Act’s requirements. 

The matter will proceed to a penalty hearing before the High Court where the parties will jointly submit that Tiger Brokers should be ordered to pay a pecuniary penalty of $900,000. The amount of any pecuniary penalty will be determined by the Court. 

The proceedings follow the FMA issuing a formal warning to Tiger Brokers in March 2020 for failing to have several adequate AML/CFT protections in place. 

After issuing the warning, the FMA opened an investigation into Tiger Brokers’ compliance with the Act, including obtaining a sample of customer files and other documents required for record-keeping. The FMA concluded the extent of Tiger Brokers’ non-compliance warrants strong enforcement action in the form of civil pecuniary penalty proceedings. 

The FMA considers Tiger Brokers’ record-keeping breaches are systemic and significant as they are not confined to the sample of customer files. The FMA alleges that Tiger Brokers’ records were not readily accessible and readily convertible into English (as required by the Act).  

Margot Gatland, FMA Head of Enforcement, said: “The anti-money laundering and counter financing of terrorism regime is an important pillar to maintaining the integrity of New Zealand’s financial markets, so we take non-compliance seriously. Our case alleges 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. 

“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. 

“This case shows the FMA can respond to misconduct promptly with an intervention, such as a formal warning, but this may not be the end of the matter and we may escalate the response if we consider it appropriate to do so in the circumstances.” 

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. 

Note: The FMA’s case relates to Tiger Brokers’ AML/CFT policies, processes, controls and obligation to file suspicious activity reports. It does not allege that Tiger Brokers has allowed money laundering or financing of terrorism to take place.