Investment platform Sharesies is in hot water after a warning from the Financial Markets Authority.
The FMA issued the popular shares app a formal warning for having insufficient “anti-money laundering procedures, policies and controls in place.”
FMA director James Grieg says it’s essential for businesses to have adequate controls and systems.
“Sharesies has built a significant customer base over a short period, and we consider the risk of the business being susceptible to money laundering if it continues with current practices.”
He noted that they don’t believe the company has enabled “money laundering or the financing of terrorism,” adding they have cooperated with the FMA.
Sharesies Ltd and Sharesies Nominee Ltd were found non-compliant with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.
According to the FMA, the company failed to collect information from customers about the nature of their proposed business relationship.
Sharesies hadn’t obtained adequate details needed to determine if customers were required to be subjected to “enhanced customer due diligence.”
The group also allegedly failed to verify the identities of up to 7800 customers whose account balance was over $1000.
Sharesies' Chari Alison Gerry says no evidence of money laundering had been found but rather a need to “strengthen [their] customer identification practice.”
“As soon as we became aware of the concerns raised, we immediately put in please a work programme to address each of those issues outlined.”
These included adding specific questions to ask its users their purpose in using the Sharesies platform, tightened controls for identifying users wanting to use the app as a trust, and improved verifying customers’ identities.
From the 7800 accounts highlighted by the FMA as needing more robust identification, Sharesies says this represents just two per cent of its users.
“Sharesies has been in contact with all of these customers to establish a clearer link between them and their identity documentation,” says Gerry.
“More than half of the relevant customers have now completed the identification process.”
Alison Gerry says the changes implemented hope to assure the FMA that they are demonstrating best practices.
“While Sharesies has seen rapid growth over the last year, we have consistently invested in our compliance function over the years, in terms of both technology and human resources.
“Our purpose as a business is to make investing accessible to everyone and we know that to do this, there needs to be a process of constant improvement."
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