The Financial Markets Authority (FMA) has warned New Zealand investment platform Sharesies and its entities for failing to have sufficient anti-money laundering procedures, policies, and controls in place.
The financial watchdog’s ongoing monitoring of compliance with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act has led to identifying the compliance issues.
Sharesies has failed to obtain information about the nature and purpose of the proposed business relationship from most customers and to determine whether certain customers should be subject to an enhanced customer due diligence.
In Zealand, customers with an account balance over $1000 are required to complete identity verification. Sharesies had 7,815 customers that lacked such standard customer due diligence.
The FMA requires Sharesies to complete a number of actions to meet its obligations under the regulatory framework, including to amend its onboarding process, develop a compliant ID verification process and train staff, and enhance customer diligence for trusts.
James Greig, FMA Director of Supervision said: “We welcome the way online investing platforms like Sharesies have opened up the investing landscape in New Zealand, but it’s essential that fast-growing businesses ensure their compliance processes and policies keep pace.
“We have made this warning public because Sharesies’ contraventions appeared to be symptomatic of a business that has grown quickly without ensuring fully effective processes and controls were in place for AML and CFT. It’s important for all firms to understand our expectations under the AML/CFT Act.
“Sharesies has built a significant customer base over a short period and we consider there is a risk of the business being susceptible to money laundering if it continues with current practices. We do not consider the contraventions were deliberate. Sharesies is cooperating with the FMA and has taken steps to update and strengthen its practices,” Mr. Greig said, adding the country’s AML laws “have been in place for some time now and are designed to thwart criminals and maintain integrity in our financial system. It’s essential that firms have the appropriate systems and controls in place.”
The FMA may issue a formal warning if there are reasonable grounds to believe a firm has engaged in conduct that constitutes a civil liability act. This is not the case with Sharesies.