Finance company fined $4 million for anti-money laundering breaches

A money transfer company has been fined $4 million for repeated non-compliance with anti-money laundering legislation.

Jin Yuan Finance Limited, a money remitter that formerly had eight branches across Auckland and one in Hamilton, had been repeatedly warned about failing to comply with the Anti-Money Laundering and Countering Financing of Terrorism Act. 

The Department of Internal Affairs had been monitoring the firm for five years due its history of non-compliance. It had been repeatedly warned by the department of its obligations to report suspicious transaction, including a formal published warning online. 

The High Court judgment on October 3 follows a penalty hearing on July 24, in which the department asked Justice Woolford to order Jin Yuan to pay a penalty of over $4 million.

The department's anti-money laundering group director, Mike Stone said, "This result highlights the severity of the offending for businesses that persistently fail to comply with the AML/CFT Act – the cost of non-compliance is high."

Stone said the result highlighted the severity of the offending in failing to comply with the legislation.

Jin Yuan had repeatedly breached requirements to conduct customer due diligence, adequately monitor accounts and transactions, keep records, establish, implement, and maintain an anti-money laundering and countering financing of terrorism  programme and ensure that its branches and subsidiaries complied with the act.

During a four-year period, the company repeatedly told investigators that it was doing its business through one company bank account, the court heard.

During that time, there were 55,097 transactions through its account with a total of $278.5 million of business.

Other accounts associated with the company had been shut down by the banks who were complying with their obligations under the anti-money laundering legislation.

However, it later emerged that the company was using 17 bank accounts. Many of those other accounts were in the names of businesses and people not associated with the company.

The company only made admissions about the secret accounts when directly confronted by investigators for the department, the court heard.

"The cost of non-compliance is high," Stone said.

Jin Yuan repeatedly failed to meet its obligations despite numerous engagements with the department and had not actioned a remediation plan the department had put in pace to help the firm meet its requirements.

"When there are serious breaches and systemic non-compliance, we are willing to take strong regulatory action. It is important that we take regulatory action when there is a risk that criminals are exploiting New Zealand businesses to launder the proceeds of crime," Stone said.

Every year about $1.35 billion from the proceeds of crime is laundered through New Zealand businesses causing harm to communities and damaging the reputation of New Zealand businesses.

The department supervises a range of businesses who must comply with the act, including financial institutions, trust and company service providers, lawyers and conveyancers, accountants, real estate agents, high value dealers and the Racing Industry Transition Agency. (via Stuff)