DUBAI // The US internet share dealing giant E*Trade is closing its Dubai branch, which serves the entire Middle East, three months after it was fined Dh1.1million for deficiencies in money-laundering controls.
Customers have been assured it will be business as usual and they will be able to trade despite the closure. But it is understood that, at least for now, investors in the region will not be able to open accounts.
The E*Trade Securities office at the Dubai International Financial Centre (DIFC) will close on Sunday, meaning the company will drop its presence in the region.
It enables online customers in the Middle East to buy and sell shares, bonds and funds listed on major US markets, including the New York Stock Exchange and Nasdaq.
The company has sent an e-mail to account-holders saying: "We write to inform you that the Dubai International Financial Centre branch of E*Trade Securities Limited is in the process of being closed.
"This development does not require you to take any action as you will be able to continue using your E*Trade account in the same way as you have done previously."
The e-mail gives new contact details to be used by customers from next Monday. It says requests for administrative help should be sent to the E*Trade Securities office in Jersey City, the US, and any complaints should be sent to the company's UK office in London.
The huge fine was imposed at the end of April by DIFC's regulator, the Dubai Financial Services Authority (DFSA).
The authority said E*Trade Securities had failed to obtain enough documented proof of the origin of funds, or the sources of clients' wealth.
The DFSA also said E*Trade had failed to implement adequate policies to "address the need to assess the money-laundering risk of its clients".
The company tried to rectify the situation by asking customers to supply more documents, but 1,196 investors failed to do so and their accounts were closed.
“We made a business decision to close the branch in Dubai as the current and projected opportunity does not support the investment required to maintain a local branch,” said Susan Hickey, E*Trade’s New York-based senior vice-president for corporate communications.
“Our business there represents a very small part of E*Trade’s business – fewer than 400 customer accounts. We are working with customers to ensure a smooth transition.”
The loss of E*Trade Securities comes at a time of change at DIFC, where last week Abdullah Mohammed Saleh was appointed governor. Meanwhile DIFC Investments, which manages a portfolio of assets owned by the banking and financial services hub, is working on plans to sell off properties.
New York-based E*Trade was founded in 1991 and has 3.1 million customers worldwide.