Tiger Brokers Fined $900,000 Over Breaches of AML/CFT Act in New Zealand

The Auckland High Court recently announced a hefty penalty of $900,000 for Tiger Brokers (NZ) Limited due to violations of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009. The Financial Markets Authority (FMA) had instituted legal proceedings against the firm.

In the legal action, four key issues were highlighted, all of which Tiger Brokers conceded to. These breaches involved:

• Neglecting to execute adequate client due diligence procedures, which included standard, enhanced, and extra client due diligence for some clients,

• Failure to cease a pre-existing business partnership with a client when proper due diligence could not be conducted,

• Non-reporting of dubious transactions, and

• Not maintaining records as mandated by the Act.

Tiger Brokers' violations led to a lapse in oversight, enabling approximately $NZD60.8m to be processed through the New Zealand financial system between April 2019 and January 2020 without the required checks and regulations. Out of these, the failures in client due diligence and record-keeping were the most severe, involving at least 3,768 clients.

This episode highlighted Tiger Brokers' overall lax approach to regulatory compliance. In the 2019-2020 AML/CFT reporting year, the firm dealt with 69,705 to 126,230 clients, with gross transaction values fluctuating between $3.6 billion and $35.2 billion.

The FMA initiated an investigation into Tiger Brokers following a formal caution issued in April 2020.

While delivering the judgment, Justice Gault emphasized the importance of adherence to the Act in maintaining the reputation and integrity of New Zealand's financial ecosystem.

FMA's Head of Enforcement, Margot Gatland, underlined the significance of the court's judgment in reinforcing these laws. She explained that Tiger Brokers' failure to fulfill core obligations laid down by the Act was a serious issue that threatened the integrity of the nation's financial markets. The firm had failed to vet clients properly, respond appropriately to suspicious activities, and maintain necessary records.

Gatland further stressed the FMA's commitment to ensuring regulatory compliance, using all available tools to counter firms' lax compliance approach. She pointed out that the failure to maintain records as required by the AML/CFT Act severely obstructed the FMA's efforts to ensure compliance and effectiveness of the system.

In her statement, she made it clear that New Zealand-based AML/CFT reporting entities cannot delegate their compliance responsibilities to third parties or rely on parent companies abroad without making sure they meet the compliance requirements under New Zealand law.

Tiger Brokers, a subsidiary of Tiger Fintech (Singapore) PTE Limited, provides share brokering services through its online trading platform, Tiger Trade.

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