The Financial Markets Authority (FMA) has issued a popular Kiwi investment platform with a warning after it failed to comply with anti-money laundering requirements.
The FMA said in a statement issues with InvestNow Saving and Investment Limited were picked up through routine monitoring in November 2021 and June 2022.
The FMA found InvestNow failed to complete standard customer due diligence, among a raft of other failures which include:
- Obtaining sufficient information about the nature and purpose of the proposed business relationship from customers.
- Taking reasonable steps to complete identity verification of customers and beneficial owners.
- Conduct ongoing and/or enhanced customer due diligence on certain customers, including taking reasonable steps to verify source of wealth or funds and establish, implement and maintain an adequate and effective AML/CFT programme.
FMA's director of supervision James Greig said "DIY investing platforms" are at high risk of being targeted for money laundering or terrorist funding because of the "highly liquid and digital nature" of the business.
"InvestNow failed to ensure it had the appropriate processes and controls to identify and respond to anomalies. Additionally, InvestNow was aware of its shortcomings but the company was slow to respond."
Following the FMA's findings, it's issued InvestNow with a list of requirements for it to implement.
- Obtain information from its current customers to record their reasons for using the platform.
- Complete customer identity verification on its current customers, amend its onboarding process to ensure customer identity is properly verified, and provide training to staff on this process.
- Complete enhanced customer due diligence on customers that have made transactions which are complex, unusually large, or have an unusual pattern; amend its processes to ensure enhanced customer due diligence is undertaken when required; and provide training to staff on these processes.
- Complete ongoing customer due diligence on customers where there has been a material change (such as the information they have provided or their typical trading behaviour) in the customer’s relationship with InvestNow; amend its processes to ensure ongoing customer due diligence is undertaken when required; and provide training to staff on these processes.
- Review and revise its AML/CFT programme to ensure adequate and effective procedures are established for all types of customer due diligence and complex or unusually large transactions.
- Revise its AML/CFT programme based on an updated risk assessment that considers the nature, size, and complexity of its business, the products and services it offers, and the delivery methods of these products and services.
The FMA has given InvestNow until October 31 to formulate a plan and submit it to the FMA.
And the FMA acknowledged that InvestNow isn't being accused of allowing or enabling money laundering or financing of terrorism.
"The FMA also acknowledges InvestNow has taken steps to comply with the AML/CFT Act."
