1 May 2011 — DFSA Takes Action on Failures in E*TRADE's Anti-Money Laundering Systems and Controls
Dubai, Sunday, 1 May 2011: 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.”Enforceable Undertaking:
A copy of the EU between the DFSA and E*TRADE is posted on the DFSA website at: https://www.dfsa.ae/What-We-Do/ENFORCEMENT#Regulatory-Actions
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For further information please contact:
Angharad Irving-Jones (Ms)
Head of Corporate Communications
Dubai Financial Services Authority
Level 13, The Gate
Tel: +971 (0)4 362 1661
Fax: +971 (0)4 362 0801
The Dubai Financial Services Authority (DFSA) is the independent regulator of financial and ancillary services conducted in or from the Dubai International Financial Centre (DIFC), a purposebuilt financial free-zone in Dubai. The DFSA's regulatory mandate covers asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodities futures trading, Islamic finance, insurance, an international equities exchange and an international commodities derivatives exchange.
Paul M Koster was appointed Chief Executive of the DFSA on 1 December 2008. Prior to becoming Chief Executive, he was Commissioner and Member of the Executive Board of the Autoriteit Financiële Markten (AFM), the national, integrated conduct of business financial services regulator for the Netherlands, where he was identified as one of the four leaders shaping the conscience of Dutch business. Mr Koster joined the AFM in March 2001 and in addition to his duties as a Commissioner, he chaired, from May 2006 until December 2007, CESR-Fin, the permanent working party of the Committee of European Securities Regulators that co-ordinates the endorsement and enforcement of financial reporting standards in Europe.
For the previous two years he had chaired CESRs Sub-committee on International Standards Endorsement. During his time with the AFM, he was also a Member of the IOSCO Chairs' Committee and, as Chief Executive of the DFSA, he remains actively involved in the work of IOSCO.
Mr Koster previously served as Executive Vice President (Corporate Internal Audit) at Royal Philips Electronics 1998 to 2001; as Managing Partner Corporate Finance, Coopers & Lybrand 1988 to 1998; and as Chief Compliance Officer and Acting Commissioner of Quotations, Amsterdam Stock Exchange 1986 to 1988; and carried out a number of senior finance functions in his earlier career, having trained as an accountant with Arthur Andersen. Mr Koster is a licensed Registered (Chartered) Accountant having qualified through the Royal Dutch Institute of Chartered Accountants in 1977 and certified as a registered auditor in 1983.
In May 2009, Mr Koster joined the Advisory Board of the Emirates Securities and Commodities Authority (SCA), the UAE's federal securities regulator, and in July 2009, he also became a Member of the Consultative Advisory Groups of the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA).
In September 2010, Mr Koster won the 'CEO of the Year for Financial Services' award and was voted one of the most influential expatriates living and working in the region today.