Failure
to comply with money-laundering rules resulted in a $5.29 million penalty for
Auckland currency remitter Ping An Finance.
Owned by Xiaolan Xiao,
Ping An Finance (Group) New Zealand Ltd ostensibly operated as a low value
remittance service from offices above Auckland’s Queen Street for Chinese
migrants and students. But Internal
Affairs investigators unearthed a large-scale operation which over the 2014
calendar year handled transactions totalling over $105.4 million. The High Court was told there had been a
wholesale failure to carry out due diligence on customers as required by the
Anti-Money Laundering and Countering Financing of Terrorism Act. Proper customer records were not kept. Mandatory reporting of high-value
transactions was not carried out.
Justice Toogood said Mr Xiao misled Internal Affairs in the course of
its investigation and demonstrated a complete disregard for the Act’s
requirements. Out of some 1500
transactions surveyed, 173 transactions raised suspicions. They included multiple transactions with
individual customers on the same day, or within a short period, transactions
for large amounts and high-value cash deposits.
There were multiple transactions with 122 customers and no evidence of any
customer identity recorded to properly identify their business. The most egregious example was a $444,444
wire transfer by one customer in July 2014 followed up with three separate
transactions by the same customer four days later transferring a further
$700,000.
Failures to properly document
transactions, conduct proper due diligence on customers or report suspicious
transactions can lead to fines of up to two million dollars for each non-compliance
resulting in a combined potential liability of some eight million dollars. Classified as civil penalties, proof is
required to the civil standard of proof only; on the balance of probabilities.
Neither Ping An Finance
nor Mr Xiao defended Internal Affairs’ claim.
Born in Beijing, Mr Xiao is a New Zealand citizen.
Internal
Affairs v. Ping An Finance Group – High Court (28.09.17)
17.124