FIAU slaps €226,000 fine on forex trader

A Maltese foreign exchange platform has been fined over €226,000 by the Financial Analysis Intelligence Unit over shortcomings in its risk compliance and due diligence of clients

Triton Capital Markets (previously FXDD Malta) provides interbank foreign exchange pricing to clients around the world. Its website gives investors, traders and money manages access to trading facilities in currencies and precious metals.

Triton Capital Markets includes former BOV chief executive officer Tonio Depasquale as one of its directors, and is owned by American businessman Emil Assentato, who has founded various currency and securities exchange companies.

The FIAU found various shortcomings in the company’s business risk and cutsomer risk assessments, as well as a lack of enhanced due dilegence on various clients, included politically-exposed persons.

In four files reviewed, PEP identification measures were not done for all the individuals involved. Concerns were heightened since these clients had been on-boarded under a less stringent regulatory regime in the United States than that currently in force in Malta.

“PEPs pose a high risk of ML/FT due to the position they occupy and the influence they may exercise through their prominent public function,” the FIAU said. “Risks include those of being involved in corrupt practices, accepting bribes, or abusing or misappropriating public funds. The failure to carry out checks to determine whether a customer is politically exposed or otherwise exposes a subject person to a heightened risk of ML/FT without the necessary mitigating measures being employed.”

The FIAU also said that no business risk assessment existed in the company, either at interview stage – when the BRA was said to be in its final stages – or even at the compliance review.

The FIAU said that without a BRA, Triton had “diminished both its ability to comprehensively identify the threats and vulnerabilities to which it was exposed and to adequately implement the necessary controls to mitigate the risks.”

In 20% of the files reviewed, the FIAU said the compay had failed to obtain the necessary identification and verification of natural persons as required. “There were instances where the residential address verified did not tally with the one provided by the customer at onboarding, and yet the company did not question this. Similarly, at times the identity information did not match and yet again the Company did not enquire about this discrepancy.”

In eight cases reviewed by the FIAU, no enhanced due diligence (EDD) was applied, finding its risk matrix for such high-risk corporate entities had been “generic and non-comprehensive since most of the measures focused on obtaining verification documents or validating the customer’s residential address.”

In one case, the file did not contain adequate EDD measures to counteract the risks emanating from political connections. Insufficient documentation was collected for source of wealth and expected source of funds to be used in the business relationship. The FIAU said the company was “at least expected to take adequate measures to be satisfied that it does not handle proceeds derived from corruption or other criminal activities which are risks associated with a customer who was a PEP (politically exposed person).”

The latter was more important since during the file review it was noted that the customer had initially intended to open an introducing broker relationship, however, it was then decided that they would trade their own funds. “Understanding the provenance of the funds and the PEPs wealth was thus indispensable,” the FIAU said.

In another case, a customer stating they were a self-employed biologist with an annual income between $25,000-$50,000 declared they were depositing less than $25,000. The FIAU said that the company should have obtained further information on such a client.

“Indeed, the company did not have an understanding as to the expected source of funds, as well as how such funds would be sourced. The company had also failed to obtain information on the customer’s source of wealth. Such information is even more important since there was a great discrepancy between the estimated annual income ($52,000) and the customer’s net worth ($900,000).”