FMA Files Proceedings Against CLSAP NZ (formerly KVB Kunlun) For Alleged Anti-Laundering Breaches
The Financial Markets Authority (FMA) has filed civil High Court proceedings against CLSA Premium New Zealand Limited (CLSAP NZ) for alleged breaches of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.
CLSAP NZ, formerly KVB Kunlun New Zealand Limited, is the local subsidiary of the Hong Kong parent, CLSA Premium Limited. CLSAP NZ provides various financial services, including broking, financial advice and derivatives.
The FMA claims CLSAP NZ failed on numerous occasions to conduct sufficient customer due diligence and enhanced customer due diligence, to terminate business relationships, to report suspicious transactions and to keep records in accordance with the AML/CFT Act¹. 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 AML /CFT Act enables the FMA to take action against a reporting entity. The FMA claim, filed in the High Court at Auckland, is seeking a pecuniary penalty against CLSAP NZ and costs.
The directors of CLSAP NZ during the relevant times were Rongjun (June) Zhang, Songyuan Huang (Benny Wong), Stefan Liu, Robert Manwarring Noakes and Richard Clive Pearson. The directors are not parties to the proceedings.
Nick Kynoch, FMA General Counsel, said: “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.”
The maximum pecuniary penalty for these alleged breaches is $2 million for a company.
The FMA is one of three supervisors under the AML/CFT Act, along with the Reserve Bank of New Zealand and Department of Internal Affairs. The FMA currently supervises around 800 reporting entities that are required to comply with the Act. Not all are licensed by the FMA.
Under the Act, reporting entities are required to have a written risk assessment, have a compliance programme, and designate a compliance officer to administer and maintain the programme.