MALTA FINANCIAL SERVICES FIRM HIT WITH €244,679 FINE OVER ANTI-MONEY LAUNDRING SHORTCOMINGS

Company Fined for Failure to Implement Adequate Anti-Money Laundering Measures

A Malta-based financial services firm, XNT Ltd (formerly Exante Ltd), has been slapped with a €244,679 fine by the Financial Intelligence Analysis Unit (FIAU) for failing to implement adequate anti-money laundering measures. The penalty was announced on Monday following an off-site compliance examination carried out in 2021.

Shortcomings in Client Information Verification

The FIAU found that XNT Ltd had failed to properly assess and verify client information despite handling massive transactions. In some cases, the company did not collect or obtain sufficient documentation to support transactions, with generic information being used instead.

• One customer file reviewed by the FIAU showed €40 million in incoming payments over a three-year period.
• Another file revealed deposits totaling over $1 million in just three years. The company provided inadequate supporting documentation for these transactions, failing to establish how the funds were generated or accumulated.

Inadequate Money Laundering Reporting Officer

The FIAU also found that XNT Ltd’s money laundering reporting officer lacked understanding of the company’s policies and controls. The penalty is a result of the company’s inability to adequately inquire into the source of funds and how they were accumulated.

Previous Allegations of Financial Irregularities

This is not the first time XNT Ltd has been linked to financial irregularities. In 2015, its mother company Exante Ltd was implicated in a massive US insider trading racket, with officials allegedly linked to $100 million in profits derived from an international hacking ring.

• Although charges against the company were later dropped, it spent months trying to extricate its clients from an asset freeze imposed by the American Securities and Exchange Commission.
• Its Cyprus-based subsidiary EXT Ltd was flagged by the Russian Central Bank last year for “illegal professional participation in the securities market”.

Importance of Robust Anti-Money Laundering Measures

The fine highlights the importance of robust anti-money laundering measures in the financial services industry, particularly in jurisdictions like Malta with a reputation for financial secrecy. The FIAU’s action serves as a warning to other companies operating in the sector to prioritize transparency and accountability.

Conclusion

XNT Ltd’s failure to implement adequate anti-money laundering measures has resulted in a significant fine. This case serves as a reminder of the importance of robust anti-money laundering measures in the financial services industry, particularly in jurisdictions with a reputation for financial secrecy.