Sharesies issued formal warning for violating anti-money laundering and terrorist financing law

According to the New Zealand Police, prescribed transactions are transactions made through a reporting entity regarding international money transfers (IFT) – an international wire transfer of NZ $ 1,000 or more when at least one of the institutions involved in the transaction is in New Zealand, and at least one is outside New Zealand; and Large Cash Transactions (LCT) – a domestic physical cash transaction of NZD $ 10,000 or more involving physical currency (i.e. coins and printed money designated as legal tender) .

By law, reporting entities are required to report their prescribed transactions to the police financial intelligence unit, Reserve Bank Deputy Governor and Chief Financial Stability Officer Geoff Bascand said.

On Monday, the FMA said Sharesies had breached its obligations by not collecting enough information on why clients are using the app or to determine whether clients should be subject to enhanced due diligence. He also said the platform failed to perform identity verification for customers with account balances over $ 1,000 as part of standard customer due diligence.

Sharesies has been ordered to implement a number of changes to meet its obligations. The company was founded in 2017 and made investing more accessible to everyday Kiwis.

FMA Supervisory Director James Greig said he welcomes the way online investment platforms like Sharesies have changed investing, but it is essential that fast-growing companies ensure to keep their compliance processes and policies up to speed.

“We made this warning public because Sharesies’ breaches appeared to be symptomatic of a rapidly growing business without ensuring that fully effective processes and controls were in place for AML and CFT.

“It is important that all companies understand our expectations under AML / CFT law. Sharesies has built up a significant customer base over a short period of time and we consider that there is a risk that the company will be exposed to money laundering if it continues with current practices. We do not consider the contraventions to be willful. Sharesies is cooperating with the FMA and has taken steps to update and strengthen its practices.

“New Zealand’s anti-money laundering laws have been in place for some time now and are designed to thwart criminals and maintain the integrity of our financial system. It is essential that businesses have the systems and tools in place. appropriate controls. “

The full changes that Sharesies needs to make include:

obtain information from all of its current customers to show their reasons for using the platform and modify its onboarding process to capture this information in the future

develop and implement a process to complete identity verification at the time of account request and provide training to staff on these processes

obtain sufficient information from all clients who have used the word “trust” in the account application process and perform enhanced client due diligence if they are trusts – a requirement under the Act

adequately verify the identity of all clients and restrict withdrawals or transfers until such verifications are completed.

Sharesies isn’t the only company to end up with a warning. Earlier this month, the Reserve Bank of New Zealand issued a formal warning to Westpac New Zealand for breaking the law.

About Charles D. Goolsby

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