ADGM imposes $360,000 fine on money services company for compliance failures

The financial free zone is cracking down on companies that do not comply with rules to clamp down on illicit transactions

The Abu Dhabi Global Market has 'robust' policies in place to thwart money laundering and the financing of terrorism. Victor Besa / The National

The Abu Dhabi Global Market's Financial Services Regulatory Authority (FSRA) imposed a penalty of $360,000 on Wise Nuqud, a licensed money service company, for failing to abide by several anti-money laundering requirements.

The FSRA found that Wise Nuqud, which operates within the ADGM, did not establish and maintain adequate anti-money laundering systems and controls to ensure full compliance with its obligations, the ADGM said on Tuesday.

The authority has “robust and comprehensive” supervision and enforcement policies in place to thwart money laundering and the financing of terrorism, it said.

“The FSRA is committed to ensuring that all regulated entities maintain high standards to address money laundering risks and, where appropriate, the FSRA will take strong action to ensure firms comply fully with the anti-money laundering requirements in [the] ADGM,” said FSRA chief executive Emmanuel Givanakis.

The UAE has announced various measures to fight and prevent money laundering in the country.

Earlier this month, the UAE Central Bank issued new guidelines to help licensed financial institutions to combat money laundering and terrorism financing through the mitigation of risks related to payments.

Licensed financial institutions, including lenders, are obliged to develop internal policies, controls and procedures to manage risks linked to money laundering and the financing of terrorism, the banking regulator said at the time.

In July, the regulator penalised an exchange house in the country for failing to achieve appropriate levels of compliance with anti-money laundering laws. It imposed a fine of Dh5.2 million ($1.4m) on the exchange house.

The UAE's anti-money laundering task force imposed fines of more than Dh41m in the first six months of 2022, as it continued to rein in illicit financial activity.

The FSRA found that Wise Nuqud failed to fully comply with several anti-money laundering obligations, the ADGM said.

The company did not identify and verify the source of funds and wealth when it came to a category of customers it had identified as high risk, before undertaking transactions on behalf of those customers.

Instead, Wise Nuqud carried out source of fund and wealth checks on those customers only when their account met a specified payment threshold — and after it had already established a business relationship with those customers, the statement said.

The company did not properly obtain the approval of senior management to establish business relationships with a category of customers that it had identified as high risk.

It also did not consider nationality as part of its risk-based assessment of customers, the ADGM said.

Finally, it did not obtain and consider adequate information on the intended nature of business for a category of its customers.

This means Wise Nuqud did not identify and assess the expected volume of business for those customers as part of the risk assessment and due diligence it is supposed to perform before establishing a business relationship with customers, the ADGM said.

However, the FSRA’s review did not find any instances of actual money laundering resulting from Wise Nuqud's system and control failures.

The company and its senior management co-operated fully with the FSRA’s inquiries and have taken “substantial steps” to address each of the issues identified by the regulator, the financial free zone said.

“Wise did not dispute the FSRA’s findings and agreed to settle at the earliest opportunity, which meant that it qualified for a discount of 20 per cent on the financial penalty. Otherwise, the FSRA would have imposed a financial penalty of $450,000,” it said.