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29 June 2023

Tiger Brokers (NZ) Limited

Timeline

June 2023

The Auckland High Court has ordered Tiger Brokers (NZ) Limited to pay $900,000 for breaching the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (the Act), in proceedings brought by the FMA.

December 2022

FMA 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.

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).  

April 2020

FMA issues a formal warning to NZX-accredited broker Tiger Brokers (NZ) Limited for failing to have several adequate anti-money laundering protections in place.

In the FMA’s view, Tiger Brokers had failed to:

  • adequately conduct enhanced and ongoing customer due diligence where required.
  • adequately verify relevant customer identification documents.
  • obtain adequate source of fund or wealth information relating to high risk customers, and take reasonable steps to verify that information.
  • report suspicious activity to the relevant authorities within three working days after forming a suspicion.
  • take reasonable steps to determine whether a customer or any beneficial owner, is a politically exposed person.

The FMA concluded there were reasonable grounds to believe the business had contravened the Act.

Tiger Brokers must prepare and submit a plan to the regulator before 17 April 2020 describing how and when it will amend the issues to become compliant. It must then complete these actions by 30 September 2020, or it will face enforcement action.