ADGM fines money service provider Dh1.78 million for inadequate anti-money laundering controls

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has imposed a financial penalty of $486,000 (Dh1,784,835) on a licenced money service provider operating in ADGM for inadequate compliance with applicable Anti-Money Laundering (AML) requirements during the period from March 2021 to November 2022.

The company also acted outside the scope of its Financial Services Permission.

The FSRA found that the money service provider failed to establish and maintain adequate AML systems and controls to ensure full compliance with its AML obligations in that it failed to:

- Ensure that its AML business risk assessment was up to date and adequately identified the assessed money laundering risks to which its business was exposed;
- Adequately carry out required AML risk assessments and due diligence on its customers, in that it failed to assess expected payment volumes of its customers, assess and consider all of its products when undertaking customer AML risk assessments, and obtain and verify its customers’ residential address when undertaking Customer Due Diligence; and
- Ensure that its AML policies, procedures, systems and controls were adequate and effective to comply with AML requirements, including the effective monitoring and detection of suspicious activity or transactions.

In addition, the FSRA found that, in the period between May 2021 and November 2022, the company had made arrangements for its customers to buy contracts of insurance from a third-party provider through an application provided by the company. In doing so, the company was found to have conducted the Regulated Activity of Insurance Intermediation without the appropriate authorisation to perform this activity.

The FSRA’s review did not identify any instances of actual money laundering resulting from the company’s AML systems and control failures. The company and its senior management cooperated fully with the FSRA’s enquiries and the company has remediated each of the issues identified by the FSRA, subject to the FSRA’s verification.

The company agreed not to dispute the FSRA’s findings and agreed to settle at the earliest opportunity, which meant that it qualified for a discount of 20 percent on the financial penalty, otherwise, the FSRA would have imposed a financial penalty of $607,500 (Dh2,231,044).

Emmanuel Givanakis, Chief Executive Officer of the FSRA, said, “The FSRA continues to actively support the national AML/CFT agenda. The FSRA is committed to taking proactive steps to ensure that all regulated entities maintain high standards to combat financial crime and money laundering risks, as well as ensuring that regulated entities comply with the FSRA’s Rules and Regulations. The FSRA will not hesitate to take robust action to ensure firms comply fully with anti-money laundering requirements in the ADGM, and to ensure that authorised firms do not conduct Regulated Activities outside the scope of their licence.”