The Financial Markets Authority is taking a financial services subsidiary to court over almost $50 million in transactions that it alleges breached the Anti-Money Laundering and Countering Financing of Terrorism Act.
High Court proceedings have been filed against CLSA Premium New Zealand Limited (CLSAP NZ), formerly KVB Kunlun New Zealand Limited. The company is a local subsidiary of CLSA Premium Limited, based in Hong Kong. It provides financial services including broking, financial advice, and derivatives.
The Financial Markets Authority (FMA) claims CLSAP NZ failed on many occasions to perform adequate diligence, to terminate business relationships, to report suspicious transactions, and maintain records under the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act).
The FMA also claims that the alleged breaches represented CLSAP NZ’s general approach to complying with its obligations under the Act over the time they took place.
The transactions in question are valued at almost $50 million and occurred between April 2015 and November 2018.
The FMA has filed a claim at the Auckland High Court and is seeking a pecuniary penalty against CLSAP NZ, and costs.
FMA general counsel Nick Kynock said the anti-money laundering legislation protects the integrity of New Zealand's financial system. Financial services companies must ensure they comply.
"CLSAP NZ needs to be held to account and our approach sends an important message of deterrence to the industry," he said.
Over the transaction period, CLSAP NZ had five directors: Rongjun (June) Zhang, Songyuan Huang (Benny Wong), Stefan Liu, Robert Manwarring Noakes, and Richard Clive Pearson. The FMA confirmed they weren't parties to the proceedings.
If the company is found to have breached the Act, the maximum pecuniary penalty is $2 million.
"The regime has been in place since 2013 and CLSAP’s alleged breaches are serious, so it's appropriate for the FMA to take a strong regulatory response," Kynock added.
The FMA, Reserve Bank of New Zealand, and Department of Internal Affairs are responsible for supervising the AML/CFT Act.
The FMA currently supervises around 800 reporting entities. Requirements under the Act include a written risk assessment, a compliance programme and a designated compliance officer to administer and maintain it.