Firm’s trading had to be halted after AML/CFT breaches
The Financial Markets Authority (FMA) says one company’s non-compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) was so concerning it was required to stop trading immediately.
In its Conduct Outcomes Report for the calendar year 2017, the FMA says the unnamed firm was slack on staff knowledge or training, had a lack of monitoring of suspicious transactions, and breached its own compliance programme.
The FMA had “very serious concerns” about the firm’s ability to comply with regulatory obligations.
The report notes that, after being required to stop trading immediately, the company submitted a remediation plan outlining the steps they would take to resolve the issues.
Coin offering scams
The report says the FMA came across a range of new misconduct which it discovered through its monitoring activities and investor complaints or queries.
It notes that as well as familiar types of misconduct, such as insider trading, market manipulation and scams, an area of concern that emerged was scams associated with initial coin offerings, which were taking advantage of increased consumer interest in digital currencies. The report says the high number of investment scams remains worrying.
“Scams are a widespread concern for other countries and regulators; and there is no one simple solution to the issue. It requires vigilance from the public and firm action by relevant state agencies.”
The FMA says it will continue to encourage investors to be sceptical about ‘get-rich-quick’ offers, and to deal with a New Zealand-based licensed provider wherever possible.
Other key actions in the report include:
- Engaging and educating market participants following the successful civil judgment against Milford Asset Management trader Mark Warminger and investigation into Goldman Sachs’ trading activity.
- Two insider trading cases underway in relation to trading in Eroad and VMob.
- Successful first use of section 34 powers (exercising the rights of investors) through a settlement with Prince and Partners.
- 47 charges filed against Steven Robertson/PTT Limited.
- Assessing how licensed participants are meeting the conditions of their licence.
“The FMA is fully prepared to use its enforcement powers to deal with misconduct by bringing cases to both civil and criminal courts where necessary. We also look to use our full range of regulatory tools to achieve the right outcome and a proportionate use of our resources,” says Nick Kynoch, FMA General Counsel.
“We strive, through all of our interactions, to guide and influence providers to improve their focus on delivering good outcomes for investors.
This includes engagement with the industry by our frontline supervisory teams, for example through licensing and monitoring activities, as well as publishing reports to communicate our expectations to the market.”
In 2017, the FMA conducted 72 authorised financial monitoring (AFAs) visits to ensure firms understand how they provide advice and how they comply with legislation and the AFA Code of Conduct.
Last updated on the 16th September 2019