Online trading platform Sharesies has been stung with an anti-money laundering (AML) regulatory warning after its compliance practices failed to keep up with the fast membership growth of the business.
In a release this morning, the Financial Markets Authority (FMA) called out Sharesies for several breaches of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.
The FMA pinged the platform for failing to:
- obtain information about the nature and purpose of the proposed business relationship from most customers
- obtain sufficient information to determine whether certain customers should be subject to enhanced customer due diligence
- complete identity verification for up to 7,815 customers who had an account balance of more than $1000 as part of standard customer due diligence.
Sharesies, which recently launched a new model portfolio ‘auto investment service’, is now required to implement several “actions” to shore-up its compliance systems, the FMA statement says.
Alison Gerry, Sharesies chair, said in a release: “What the FMA has identified is ways in which we need to strengthen our customer identification practice.
“As soon as we became aware of the concerns raised, we immediately put in place a work programme to address each of the issues outlined.”
Launched in 2017, Sharesies now claims more than 400,000 members and $1.5 billion on its platform.
Last week the FMA also filed civil proceedings against Geoffrey Hill, the chief of the NZX-listed New Talisman Gold Mines, for alleged market manipulation via an online share-chat platform.
Both the Sharesies and Hill actions suggest the regulator is taking an increased interest in online investment activities.
In a statement supplied to Investment News, the FMA said: “The FMA has social listening monitoring tools, which are utilised as necessary, in line with our risk/harms-based approach, and also to identify emerging trends.
“We consider platforms and online media channels should have systems to ensure any commentary is well-moderated and complies with NZ laws.”