Dubai FSA Censures Saxo Bank for Client Take-On and AML Systems and Controls Failings

We do not know the exact details by Saxo Bank has probably paid some sum to settle these charges.

The Dubai Financial Services Authority (DFSA) today censured Saxo Bank Dubai Limited (SBDL) for its failure to comply with the DFSA’s Rules regarding the on-boarding of clients.

The censure followed admissions by SBDL that it had breached the client take-on and Anti-Money Laundering (AML) Anti-Money Laundering (AML) Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Read this Term) systems and controls requirements in the DFSA’s Rules by failing to:

• Properly classify clients;
• Enter into client agreements with clients;
• Obtain sufficient and satisfactory verification of clients’ identities, permanent addresses and sources of wealth;
• Perform ongoing due diligence on clients;
• Adequately monitor client transactions; and
• Establish and maintain appropriate systems and controls in relation to Politically Exposed Persons (PEPs).

These failings increased the risk of SBDL’s Dubai International Financial Centre (DIFC) business being used for the purposes of money laundering. However, the DFSA found no evidence of any money laundering having taken place.

SBDL consented to the DFSA’s censure.

The censure arises from a DFSA investigation into the conduct of SBDL which found that SBDL’s failures arose, in part, because SBDL referred its clients to its parent, Saxo Bank A/S in Denmark, and did not carry out sufficient client classification in accordance with the Laws and Rules of the DIFC.

In censuring SBDL, the DFSA acknowledges the mitigating factors in regard to SBDL’s conduct, which are set out in the censure.

Mr Ian Johnston, Deputy Chief Executive and Managing Director of the DFSA said, “The DFSA considers the know your client and AML systems and controls of Firms in the DIFC to be of fundamental importance to maintaining the DIFC’s integrity.”

Mr Stephen Glynn, DFSA’s Head of Enforcement said, “The DFSA vigilantly supervises and detects systems and control failures relating to know your client, AML and counter terrorist financing Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term. The DFSA expends considerable resources educating the regulated community in respect of these obligations and will take strong action to enforce the applicable Laws and Rules when lapses occur.”

“The DFSA expects all Firms, as part of their compliance regimes, to establish and maintain strong and effective know your client, AML and counter terrorist financing systems and controls. Clients, therefore, should expect Firms in the DIFC to request information from them to confirm their identity, residential address and source of funds. The request for this information is to fulfill not only the Firms’ obligations under the DIFC Laws and Rules but also the Federal Law and international standards.”

Saxo Bank Holdings official statement: "”Saxo Bank Dubai Ltd. regrets the situation and fully accepts its responsibility, but believes that it has always acted in good faith. The Bank finds it unsatisfactory that it unintentionally has not met the DFSA’s conduct of business rules despite external legal counseling. Saxo Bank Dubai Ltd. has promptly cooperated with the DFSA and put new processes in place which ensures that the Bank fully meets local demands, which is among the world’s most strict.”

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DFSA Censures Saxo Bank for Client Take-On and AML Systems and Controls Failings