The Auckland High Court has ordered Tiger Brokers (NZ) Limited, a New Zealand-based subsidiary of a popular retail trading broker from Singapore, to pay $900,000 for violations of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. The proceedings were brought by the Financial Markets Authority (FMA), the local regulatory market watchdog.

Tiger Brokers Admits Four Breaches

The FMA's case was based on four causes of action that Tiger Brokers admitted to. They include failing to conduct adequate customer due diligence, to terminate existing business relationships when it was unable to conduct customer due diligence, to report suspicious activities and to keep records as required by the AML/CFT Act.

The effect of these breaches was that from April 2019 to January 2020, approximately NZD 60.8 million was transacted through New Zealand's financial system without appropriate checks and controls. The firm's customer due diligence and record-keeping failures were most significant, affecting at least 3,768 customers.

“The judgment reinforces the importance of these laws in maintaining the integrity of New Zealand’s financial markets; non-compliance is a serious matter,” Margot Gatland, the Head of Enforcement at FMA, stated. “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.”

This is a summary of a case that began in late 2022. As Finance Magnates reported, New Zealand's financial regulator then sued the Singapore broker for AML/CFT violations. The penalty imposed by the court corresponds to the one requested by the FMA more than six months ago. However, the FMA drew attention to the inaccuracies much earlier, sending an official warning back in 2020.

Compliance Failures by Tiger Brokers

The company's record-keeping violations reflected its overall weak compliance approach. In the 2019-2020 AML/CFT reporting year, it had between 69,705 and 126,230 customers and transactions totalling between $3.6 billion and $35.2 billion.

The FMA investigation into these breaches commenced after a formal warning was issued to Tiger Brokers in April 2020.

“Part 2 of the Act plays an important role in New Zealand’s regulatory landscape,” Justice Gault commented in his judgment. “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.”

While the FMA's case relates to Tiger Brokers’ AML/CFT policies and obligation to file suspicious activity reports, it does not allege that Tiger Brokers has allowed money laundering or financing of terrorism to take place.

For Tiger Brokers, this is not the only regulatory action recently. The broker, who introduced the industry's first AI investment assistant, has also struggled with problems in China. In December 2022, the China Securities Regulatory Commission (CSRC) threatened to shut down the operations of two brokers: Futu and Up Fintech (operating as Tiger Brokers). The reason was alleged unlawful securities business within the country.