E*TRADE Securities, a Dubai subsidiary of the global online trading company, has been fined Dh1.1 million after the regulator of the Dubai International Financial Centre found "deficiencies" in its anti-money laundering controls.
The company entered into an enforceable undertaking with the Dubai Financial Services Authority, which requires it to pay Dh734,580 within 30 days. The remainder of the fine will be suspended pending its "taking all steps to remediate the DFSA's concerns", according to an announcement this morning.
The DFSA has been taking a harder line with anti-money laundering controls in recent months. It announced an administrative censure for Saxo Bank, the commodities trading company, in March. The bank had failed to perform due diligence on clients and monitor transactions, among other breaches, according to the DFSA, though it was not given a fine.
The DFSA said today that E*TRADE Securities failed to obtain sufficient documentary evidence of the origin of funds or sources of wealth of clients or have adequate policies to "address the need to assess the money laundering risk of its clients".
The action arose after a periodic check of E*TRADE Securities in April 2010, where the DFSA reviewed 25 of the company's customer files and "identified a number of systems and controls deficiencies" with regards to anti-money laundering rules.
During E*TRADE Securities' attempt to rectify the deficiencies, 1,196 customers failed to provide updated documents to the company, according to the enforceable undertaking.
"This is a new era for financial services, and Firms must be more vigilant in meeting today's requirements," said Paul Koster, chief executive of the DFSA. "The action taken against E*TRADE shows that the DFSA considers the anti-money laundering and Know Your Client systems and controls of Firms in the DIFC to be of fundamental importance in this new era."
E*TRADE Securities could not immediately be reached for comment.