Western Union Business Solutions (Australia) Pty Ltd

July 2022

has censured Western Union Business Solutions (Australia) Pty Ltd for materially contravening key Standard Conditions of its derivatives issuer licence relating to net tangible assets (NTA).

Following an investigation, the FMA was satisfied that, at certain times from July 2019 to June 2021, Western Union materially contravened Standard Conditions 9(1), 9(2) and 9(6) which require:

• at all times, a licensed derivatives issuer’s NTA to be, at least, the greater of $1 million or 10% of average revenue.
• a licensed derivatives issuer to have at least 50% of the required NTA in cash or other liquid assets and any remaining balance in either additional cash or cash equivalents, or other liquid assets; and
• except with the express written approval of the FMA, if a licensed derivatives issuer has 90% or less of the required NTA, it must not under any circumstances enter into any transactions with clients that could give rise to any further liabilities or other financial obligations.

Western Union maintained it had the ability to replenish its NTA to the required level, it did so from time-to-time, it was able to provide services to clients with no issues, and there was no actual loss or risk of loss to clients arising from the contraventions. However, in the FMA’s view, these matters did not remedy, or reduce the scale of, the contraventions as the Standard Conditions must be met at all times. It is not sufficient for a licensed derivatives issuer to only prove it can meet the requirements.

The FMA acknowledges that:

• Western Union self-reported (although it did not self-identify) the contraventions of Standard Conditions 9(1), 9(2) and 9(6) to the FMA; and
• based solely on information Western Union has provided, Western Union:
• remedied the contraventions promptly;
• has implemented remedial action to prevent further contraventions; and
• is now in compliance with Standard Conditions 9(1), 9(2) and 9(6).

Western Union was granted a derivatives issuer licence by the FMA in January 2015. The company is headquartered in Sydney, Australia and the censure relates to its New Zealand business.

Western Union was censured under section 414(2)(a) of the Financial Markets Conduct Act 2013.