The Financial Markets Authority (FMA) is calling for a financial services company to be penalised $1.5 million for breaching anti-money laundering rules.
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CLSA Premium NZ has admitted it breached its duties as a financial service provider, which included not carrying out checks on its clients as required, failure to keep adequate records, report suspicious transactions or cut business ties with some clients between 2015 and 2018.
The breach of their duties covered $50m worth of transactions.
However, both parties disagreed on what the fine should be, which carries a maximum penalty of $7m.
In the Auckland High Court this morning, the FMA called for a penalty of about $1.5m but noted that with various discounts it could come down to $1.2m.
The authority's lawyer, Sam McMullan, said the company needed to be held to account and the penalty needed to send a message of deterrence to the industry.
The penalty must be significant enough so that is not seen as just a cost of compliance, McMullan said.
He said it was evident the company's risk committee was not picking up every breach it should have.
For instance, CLSAP NZ contracted out its record keeping to a third party but no back-up was kept by the company.
McMullan said the company was "entirely reliant on the third party" and put itself in a position where it could be left without records.
CLSAP NZ's lawyer Jenny Cooper QC told the court it was a responsible company that took genuine steps to comply with anti-money laundering rules, but accepts it did fail to meet all of its obligations.
However, she said this was not reflective of the wider culture of the business and a penalty of $420,000 was more appropriate.
"There was no evidence that money laundering occurred."
The issues that were identified by the FMA related to 10 customers, but the company had between 21,000 and 37,000 every year, she said.
She said there was no evidence of any commercial gain from the breach.
Justice Edwards is expected to deliver her decision in about three months time.
