€500,000 FIAU fine for money transfer firm Sendvalu

The FIAU says Sendvalu failed to undertake appropriate enhanced due diligence measures in instances clearly posing a high money laundering risk

The FIAU has fined the Maltese subsidiary of Swiss money transfer brand Sendvalu a total of €502,000 for money laundering breaches.

The company, AWS Malta, is owned by AWS Switzerland, and its Maltese directors include Jean-Pie Gauci-Maistre of Gauci-Maistre Xynou law firm, chief financial officer Steven Zammit Cutajar, and Mark Portelli, of Virtu Shipping and CEO of MIDI plc.

The FIAU found several breaches of due diligence and a lack of information on the company’s customer files. In a significant number - 84% of the sample - of customer files reviewed, the company had failed to collect adequate information on the purpose and intended nature of the business relationship, which is required to establish an adequate customer business and risk profile.

The FIAU said the company failed to undertake appropriate enhanced due diligence measures in instances clearly posing a high money laundering risk. In one file relating to a Sri Lankan national actively transacting since January 2017, the company only requested EDD information three years after Sri Lanka was listed on the FATF’s high-risk jurisdictions, well after over 220 transactions passed through. The customer then stopped all transactions after the company requested EDD.

In another case, over a period of three and a half years years, a customer remitted a total of 1,096 transactions to the Philippines amounting to $402,450 and €24,000. The stated purpose of remittance was to aid the customer’s Philippine friends for medical assistance, to purchase a new phone, to assist in setting up a beauty salon, and other purchases of services and goods.

The customer’s stated source of funds were a monthly pension and a personal line of credit. But the FIAU said further documentation should have been collected, to have better insight into the source funding such transactions, as well as to ascertain the veracity of the remittances.

In another case, a significant discrepancy was revealed between a customer’s wealth and total funds remitted over a four-year period. 563 transactions were remitted by the customer to India, to pay for family maintenance costs, school fees and other expenses; but the customer, with savings of $70,000 and salary earnings of $259,200, however remitted over $800,000 and €300,000 respectively.

The FIAU said the high value of transactions passing over to India should have led AWS to ensure the information provided by the customer on the transactions was substantiated.

The FIAU found seven breaches of the Prevention of Money Laundering and Terrorist Financing Act.

“Many of the failures have been considered by the Committee as serious and systemic, which seriousness is compounded when taking into consideration the high-risk business model of the company’s operations, the jurisdictions to where the funds were being remitted, the inadequacy in establishing a concrete customer profile and in view of several transactions processed without the appropriate levels of inquiry, probing and scrutiny,” the FIAU said.

AWS told MaltaToday in a statement that it will be appealing the administrative penalty. A“WS is licensed to act as a payment services institution to undertake money remittance services. The services provided by AWS are accessible to clients internationally through an online platform operated under the Sendvalu brand. The money remittance services provided by AWS are limited to clients who remit monies exclusively from licensed banks (either directly or by means of a credit/debit card issued by the bank) through EU regulated payment service providers. The services provided by AWS are in compliance with the Payment Service Directive Two (PSD2) and the company has always been committed to ensure that its services are not used for any form of illicit activity.”