FX broker Fullerton Markets receives warning from New Zealand’s FMA over non-compliance with AML/CFT Act
If the broker fails to take the actions required in the warning, then the FMA may take extra measures including civil action, which can result in penalties of up to $2 million per offence.
New Zealand’s Financial Markets Authority (FMA) has issued a formal warning to Wellington-based retail FX broker Fullerton Markets over suspected non-compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. In the document, dated November 23, 2017, the New Zealand regulator says that it believes that the company has engaged in conduct that constitutes a civil liability act under the AML/CFT Law.
In particular, the company is said to have violated:
- Section 26: This section requires timely check of whether a customer or any beneficial owner is a politically exposed person. Fullerton Markets has failed to carry out checks on politically exposed persons and relied on self-declarations by clients.
- Section 31(2): This section requires the company to conduct ongoing customer due diligence and undertake account monitoring to ensure that the business relationship is consistent with the reporting entity’s knowledge about the customer and the customer’s business and risk profile. Fullerton Markets has confirmed that only accounts in excess of USD 100,000 are monitored.
- Section 56: This section requires an entity to establish a compliance program based on the risk assessment, including adequate and effective procedures, policies and controls.
- Section 58: This section requires entities reporting to the FMA to have an AML/CFT risk assessment.
- Section 67(1)(a): The documentation accepted by Fullerton Markets during client on-boarding does not comply with the Identity Verification Code of Practice.
The regulator has instructed the broker to prepare and implement an AML/CFT risk assessment to the required standard, as well as an AML/CFT compliance program to the required standard. The company was also told to review its customer onboarding program and to review all customers onboarded since the start of business. The broker will also have to develop a more appropriate level of transaction monitoring rules.
In case Fullerton Markets fails to implement the measures required by the FMA, the regulator may take further steps to ensure compliance, including civil action that may result in penalties of $2 million per offence.