FMA Sues CLSA Premium NZ from AML and CFT Breaches

The (FMA) of New Zealand announced this week that it has filed civil High Court proceedings against CLSA Premium New Zealand Limited for alleged breaches of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.
The New Zealand operations of CLSA Premium was formerly known as New Zealand Limited and is the country’s local subsidiary of the Hong Kong parent, CLSA Premium Limited. The company provides a range of financial services, such as brokering, derivatives and financial advice.

According to the statement from the New Zealand regulator published on Tuesday, the FMA claims that CLSA Premium failed on multiple occasions to perform adequate due diligence and enhanced customer due diligence. The company also failed to terminate business relationships, report suspicious transactions and to keep records in accordance with the AML/CFT Act.
“The FMA also claims that these alleged breaches are representative of CLSAP NZ’s general approach to compliance with its obligations under the AML/CFT Act over the time that they occurred. The representative transactions involve nearly $NZ50 million and occurred between April 2015 and November 2018,” the New Zealand watchdog said in its statement.
FMA: the maximum penalty is $2 million
The directors of the financial firm during the relevant times were Rongjun (June) Zhang, Songyuan Huang (Benny Wong), Stefan Liu, Robert Manwarring Noakes and Richard Clive Pearson. However, the directors are not parties to the proceedings, the statement said.
In particular, under the AML/CFT Act, the FMA is seeking a pecuniary penalty against CLSA Premium New Zealand and costs in the High Court. The maximum pecuniary penalty for these alleged breaches is $2 million for a company.
Commenting on the situation, Nick Kynoch, FMA General Counsel, said in the statement: “The anti-money laundering legislation is a cornerstone to protecting the integrity of New Zealand’s financial system and it’s imperative that financial services firms ensure they are compliant. 
“The regime has been in place since 2013 and CLSAP’s alleged breaches are serious so it is appropriate for the FMA to take a strong regulatory response. CLSAP NZ needs to be held to account and our approach sends an important message of deterrence to the industry.”
CLSA Premium to vote on wind down
The announcement from the FMA, follows on from CLSA Premium, a foreign exchange (forex) broker, receiving a requisition from a shareholder earlier this month for the proposed winding up of the company and to hold an extraordinary general meeting.
As , having considered the details of the letter, the Board of the broker has decided to put forward the Requisition Resolution at the EGM for the Shareholders. According to the statement, the Shareholder who made the request, at the date of the deposit of the letter, represented around 14.75 per cent of the total issued share capital of the company.

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