The Dubai Financial Services Authority (“DFSA”) announced, today, that it has accepted an Enforceable Undertaking (“EU”) from E*TRADE Securities Ltd (Dubai International Financial Centre Branch) (“E*TRADE”).
The written undertaking follows a periodic risk assessment in 2010 conducted by the DFSA of E*TRADE, which identified a number of deficiencies in E*TRADE’s anti-money laundering (“AML”) systems and controls. E*TRADE acknowledges these deficiencies which include failing to:
- Obtain sufficient documentary evidence of its clients’ origin of funds and/or sources of wealth;
- Obtain, for some of its clients, sufficient documentary evidence of address or appropriately certified copy documents;
- Have adequate polices in place to ensure that documentation concerning a client’s identity remains accurate and up-to-date, resulting in E*TRADE’s failure to request and obtain updated Know Your Customer documents;
- Have policies, procedures, systems and controls to adequately address the need to assess the money laundering risk of its clients; and
- Ensure that its compliance resources were sufficient given the nature and scale of its business activities.
In the EU, E*TRADE has agreed to pay a financial penalty of AED 1,101,870 (USD $300,000), with AED 734,580 (USD $200,000) payable within 30 days and the remaining amount of AED 367,000 (USD $100,000) being suspended subject to E*TRADE fulfilling a number of undertakings including:
- Submitting to a further risk assessment by the DFSA;
- Taking all necessary steps to remediate the DFSA’s concerns arising from the risk assessment; and
- Making arrangements to ensure it has appropriately skilled compliance resources to conduct and manage its affairs in accordance with the DFSA’s Laws and Rules.
Mr Paul M Koster, Chief Executive of the DFSA said, “This is a new era for financial services, and Firms must be more vigilant in meeting today’s requirements. The action taken against E*TRADE shows that the DFSA considers the anti-money laundering and Know Your Client systems and controls of Firms in the DIFC to be of fundamental importance in this new era. In taking this action, the DFSA recognises that E*TRADE has co-operated fully in the investigation.”
A copy of the EU between the DFSA and E*TRADE is posted on the DFSA website here.