Tiger Brokers ordered to pay $900,000 for breaching anti-money laundering laws

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Broking firm Tiger Brokers (NZ) Limited has been ordered to pay $900,000 for breaches of the Anti-Money Laundering and Countering Financing of Terrorism acts in New Zealand.

The Financial Markets Authority (FMA) brought proceedings against Chinese-backed Tiger Brokers relating to the fintech’s AML/CFT policies, processes, controls, and obligation to file suspicious activity reports.

The FMA case rested on four causes of action, that Tiger Brokers admitted to, including:

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

Between April 2019 and January 2020, around NZ$60.8 million was transacted through New Zealand’s financial system without proper checks and controls in place, the FMA said.

The regulator highlighted Tiger’s customer due diligence and record-keeping breaches as the biggest issue — the former extended to at least 3768 customers.

The firm’s record-keeping breaches were representative of its weak compliance approach across its business, the FMA said, which in the 2019-2020 AML/CFT reporting year, comprised between 69,705 and 126,230 customers and transactions to a gross total value of between $3.6 billion and $35.2b.

In his judgment at the Auckland High Court today, Justice Ian Gault said: “Part 2 of the Act plays an important role in New Zealand’s regulatory landscape. Its purposes are to detect and deter money laundering and the financing of terrorism; maintain and enhance New Zealand’s international reputation; and to contribute to public confidence in the financial system.”

FMA head of enforcement Margot Gatland said the judgment reinforces the importance of these laws in maintaining the integrity of New Zealand’s financial markets.

“Non-compliance is a serious matter. The court found 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,” she said.

“This case demonstrates that the FMA can and will use a wide range of tools to deal with a firm’s approach to compliance, both to stop immediate harm continuing and where the misconduct is serious, take stronger enforcement action through the courts.

“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.”

Tiger Brokers has operated in New Zealand since 2015, but its client base was largely Chinese New Zealanders. Last year it launched its online trading app - Tiger Trade - into the New Zealand market, taking on local players Sharesies and Hatch Invest.

Tiger Brokers is a Nasdaq-listed company and has 9 million users worldwide.