A cryptocurrency exchange and broker has been slapped with a €463,235 fine by the Financial Intelligence Analysis Unit (FIAU) over its failure to follow anti-money laundering and funding of terrorism regulations.
Bequant, which describes itself as “a one stop solution for professional digital-assets investors and institutions”, was found to have breached these regulations in two separate investigations into different arms of their operation carried out in 2021.
FIAU noted that that the business risk assessment drafted by Bequant Exchange Limited was drafted late and had not yet been approved by the company’s board of directors by the time of the assessment.
The company’s customer verification procedures were also found to be in serious breach of regulations, with the company failing to identify 44% of its customers. It also failed to collect adequate information on the source of wealth in 36% of the files reviewed during the assessment.
FIAU also observed that the company was not collecting information on the address from which customers were sending or receiving financial assets. Several other breaches were noted, including failures to assign or justify customers’ risk ratings and adverse media screenings that were frequently carried out after the business relationship had begun, if at all.
Bequant Exchange Limited was fined €220,992 for these breaches.
In a separate assessment, Bequant Pro Limited was also found to have similar administrative shortcomings including an incorrect business risk assessment methodology and inadequate customer risk assessment procedures. The company was fined a further €242,243 for these failings.
FIAU noted that the company’s customer risk assessment consisted of a single Word document assigning risk ratings to customers “without any explanation or rationale as to how this risk rating was assigned”. It also found several shortcomings in the company’s transaction scrutiny, highlighting one withdrawal of €887,280 as an example where a transaction was not adequately scrutinized.
The firm was also found to have not carried out adequate enhanced due diligence in cases where customers were in a jurisdiction under increased FATF monitoring and processing “a large amount of transactions within a very short period of time”, with one particular customer even processing “hundreds of transactions (…) every single day”.
The FIAU highlighted one instance where the only supporting documentation for a transaction of over €1m in cryptocurrency was a single screenshot taken after the transaction had been carried out, despite it being carried out by a high-risk customer.
Bequant Exchange Limited voluntarily surrendered its MFSA licence in September 2022 and is no longer registered with MFSA. Bequant Pro Limited still holds a licence with the Authority.