AML/CFT: DIA successful in imposing $7.585 million in civil penalties

  • Legal update

    24 July 2020

AML/CFT: DIA successful in imposing $7.585 million in civil penalties Desktop Image AML/CFT: DIA successful in imposing $7.585 million in civil penalties Mobile Image

The Department of Internal Affairs (DIA) was successful in their civil proceedings under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (AML/CFT Act) against two money remitters. The civil penalties imposed totalled to $7.585 million.

The judgment can be found on the Ministry of Justice’s website, and the DIA’s media release can be found on their website.

Who needs to read it? Why?

This will be relevant to all reporting entities under the AML/CFT Act, particularly those supervised by the DIA.  It confirms the stricter approach taken to AML/CFT enforcement recently where obligations are not met, particularly when there are deliberate aggravating factors.

What does it cover?

These civil proceedings were against two money remitters, OTT Trading Group Limited (OTT) and MSI Group Limited (MSI). Pecuniary penalty orders were sought in respect of breaches of the AML/CFT Act between May 2014 and April 2019.

Specifically, these were failures to:

  • establish, implement or maintain an AML/CFT programme;
  • conduct customer due diligence (both standard and enhanced);
  • adequately monitor accounts and transactions; and
  • keep records.

The DIA made clear that this enforcement action was a result of repeated failures to meet AML/CFT obligations, despite attempts by the DIA to assist them in moving into compliance. These included non-cooperation with the DIA’s investigation and actively seeking to obstruct and mislead the DIA.

Civil penalties of $3.1 million and $4.485 million were awarded against OTT and MSI respectively, increased due to those attempts to frustrate the DIA’s enforcement role.

An injunction was also granted to prevent OTT from carrying out any AML/CFT-relevant financial activities until a further order is made. No injunction was considered necessary in respect of MSI, which was considered unlikely to continue trading.

Our view

This judgment continues the trend of the criminal prosecution pursued by the DIA earlier this year (our discussion of which can be found on our website), as well as the three previous instances of civil proceedings by the DIA for pecuniary penalties.

The fact that money remitters feature so heavily in these proceedings further indicates the risks involved in that business, and that they need to be particularly careful in ensuring that they are compliant.

While the AML/CFT supervisors may still engage with reporting entities to assist them in becoming compliant, a sterner approach is more likely to be taken as the regime matures. This is particularly so where noncompliance is deliberate and egregious, such as in this case.

What next?

If you have any questions in relation to these proceedings, or the AML/CFT regime more generally, please contact one of our experts.