With ultimate ownership residing in the Cayman Islands and customer data stored on servers in China, Tiger Brokers (NZ) Ltd was fined $900,000 for failing to comply with money-laundering legislation.
Tiger provides sharebroking services through its online trading platform Tiger Trade. A formal warning from Financial Markets Authority in March 2020 for non-compliance with Anti Money Laundering and Countering Financing of Terrorism Act requirements was followed by a sample audit of customer accounts.
The High Court was told 33 customer accounts were audited as a check on customer due diligence. This was a very small sample, given that High Court evidence showed Tiger then had some 126,000 customers. There was insufficient information about client identity on 21 of the 33 accounts audited. In all but one of those 21 accounts, the unusual nature of transactions merited enhanced customer identification. In one case, the customer file was tagged with a requirement to seek approval from senior management before processing any transaction; there was a failure to do so. Tiger said the sample selected was not representative.
Tiger Brokers was further found to have failed to report, or was late in reporting, suspicious transactions on nineteen transactions in customer accounts audited. Suspicious activity reports are collated by the police financial intelligence unit.
Tiger Brokers further failed to keep proper accounting records. Customer information was stored off-shore and not in English.
Justice Gault approved a negotiated settlement between Financial Management Authority and Tiger Brokers requiring Tiger pay a $900,000 civil penalty.
Despite its failures to comply with the Act, there was no evidence that Tiger Brokers had in fact assisted substantive money laundering or financing of terrorism, Justice Gault said.
Financial Markets Authority v. Tiger Brokers (NZ) Ltd – High Court (28.06.23)
23.102