XGlobal Markets Settles with CySEC Over Violation of AML Laws

Karthik Subramanian

XGlobal Markets Limited, a broker that is licensed by CySEC, has announced that it has settled with the regulator over a possible violation of ‘The Prevention and Suppression of Money Laundering and Terrorist Financing Law’.

In 2016, CySEC has begun an investigation on the broker over possible violation of AML laws and other laws as well. The broker has now issued a statement saying that this over the onboarding of a specific client who was later found to be a member of the family of a PEP which had certain adverse reports in the media. The client wanted to open an account and KYC needed to be done using the documents submitted by the client but the company does accept that the KYC done may not be of sufficient quality as far as this case is concerned.

The client was face to face, the company says, but still failed to identify the issues with the client and proceeded to approve the account for the client. The client went ahead and did a deposit and proceeded to trade as well. How the verification failed even though the client was face to face is not mentioned in their statement.

The client lost all the money during trading and hence did not withdraw any funds at all. The compliance department of the broker now acknowledges that some human error may have occurred in this case but claims that since no withdrawal was made, there cannot be any question of AML laws being violated.

The complaints were made to CySEC regarding this case and the broker has now agreed to settle with CySEC over this issue. Though the statement does not reveal the terms of the settlement, some media reports mention the amount as $50,000. It is open to question why such a large settlement amount had to be agreed upon for a simple ‘human error’ over a single client. CySEC has been tightening the screws on many brokers and financial services firms over the last few months and this is the latest such action.

The company statement says that the KYC and other compliance procedures have been tightened since 2016 ever since this issue came up and now the processes are more thorough and rigorous. The statement further adds that XGlobal Markets decided to come up with this statement to show its transparency in this matter and its commitment to providing the best trading environment for its traders and at the same time adhering to its responsibilities as far as regulations are concerned.

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