Photo: AFP
The Financial Markets Authority has given an online investment platform a formal warning for failing to comply with anti-money laundering requirements, despite being aware of its shortcomings.
Te Mana Tātai Hokohoko (FMA) said InvestNow Saving and Investment Service also failed to have adequate and effective processes in place to meet the requirements, such as customer due diligence.
The FMA said it detected the problems with the DIY investment platform through its routine monitoring of compliance with the Laundering and Countering Financing of Terrorism (AML/CFT) Act.
FMA director of supervision James Greig said investment trading platforms encouraged innovation and made trading more accessible, but were also at higher risk of being targeted due to the highly liquid and digital nature of the business.
"Additionally, InvestNow was aware of its shortcomings but the company was slow to respond," he said.
"Fast-growing financial services firms must ensure their AML/CFT compliance function grows on par too, otherwise the benefits they bring will be tarnished by the potential for them to be used for illegal purposes - in turn harming New Zealand's reputation."
InvestNow was required to prepare a plan describing how and when it will address shortcomings identified by the FMA, by the end of the month.
As well, the FMA required InvestNow to restrict withdrawals and transfers of financial products from customer accounts that required more information.
The FMA said InvestNow was taking steps to comply with the AML/CFT Act and was not alleging that InvestNow had allowed or enabled money laundering or the financing of terrorism to take place.