Financial services firm XNT Ltd has been hit with a €244,679 fine by the FIAU over a series of anti-money laundering shortcomings.
On Monday, the Financial Intelligence Analysis Unit said it was issuing the penalty against the brokerage company after uncovering lax measures to combat financial crime.
In 2015, XNT Ltd’s mother company, Malta-based Exante Ltd, was implicated in a huge US insider trading racket.
Exante officials were linked to US$100 million in profits allegedly derived from an international hacking ring that stole data from news wires to trade ahead of the market.
Although charges against the company were eventually dismissed, it spent months trying to extricate its clients from an asset freeze imposed by the American Securities and Exchange Commission.
Exante Ltd restructured in 2016, rebranding to XNT Ltd.
Another of its related companies, Cyprus-based EXT Ltd, was flagged by the Russian Central Bank last year. This came after it was linked to “illegal professional participation in the securities market”.
What did the FIAU find?
The FIAU fine, announced on Monday, is the result of an off-site compliance examination carried out in 2021.
Announcing the fine, the FIAU said the company did not fulfil its obligations when it came to assessing and appropriately obtaining information on their clients despite them being involved in huge transactions.
Information and documentation were at times either not collected or not adequately obtained.
The company was found to be obtaining “generic information” on its clients’ income levels, employment, and business activity.
In several files reviewed, no supporting documentation was obtained to support the transactions.
€40 million in transactions for one customer
In one customer file, incoming payments amounting to approximately €40 million over a period of three years had been approved.
In total, four incoming transactions were reviewed with one of the transactions exceeding US$24 million.
The company said the funds were transferred from an account in the customer’s name to another of his.
However, when supporting documentation in relation to these transactions was requested, the company only provided a confirmation letter (for some of the transactions) that the customer holds an account and a business relationship with another bank.
No further documentation was provided to substantiate the inbound transactions and to establish how the funds were generated.
The company failed to adequately inquire and establish the source of funds and how these were accumulated.
In another file, a customer deposited over US$1 million over a three-year period.
The company had provided the FIAU with an employment certificate indicating that the customer had been earning around €16,000 monthly for the past few years.
The company, however, failed to understand how a person earning around €200,000 per annum could afford to invest more than US$1 million in such a short period of time, especially when half of the amount was done in a single deposit.
Furthermore, the company’s money laundering reporting officer “displayed a lack of understanding of the company’s policies and controls”, the FIAU said.
Independent journalism costs money. Support Times of Malta for the price of a coffee.Support Us