Ping An, a Queen Street, Auckland-based money remitter and foreign currency service provider, has been fined $5.29 million for "serious and systemic deficiencies" in complying with anti-money laundering laws.

A High Court judgment in a case brought by the Department of Internal Affairs against Ping An Finance (Group) New Zealand Company Ltd and its director Xiaolan Xiao, is the first determination of financial penalties claimed under the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act), which came into force in 2013.

The Department of Internal Affairs, one of New Zealand's three AML/CFT Act regulators, alleged that, between January 2014 and January 2015, Ping An and Xiao "failed abysmally” to comply with requirements of the AML/CFT Act with respect to 1,588 financial transactions involving a total of $105.4 million.

“In all, 173 transactions presented to the Court by the Department contained several indicia of suspicious transactions, including unnecessary use of several transactions to pay or receive funds from a single customer on a single day or within a short period; the presence of very large transactions; and significant high-value cash deposits. Nevertheless, Ping An failed to submit a single suspicious transaction report in respect of any of the 1588 transactions it conducted during the relevant period. It is not difficult to infer that the company’s non-compliance amounted to a calculated and contemptuous disregard for the AML/CFT requirements, and that non-compliance was a cultural norm within the business," Justice Kit Toogood said.

In addition to the fine, Justice Toogood granted injunctions restraining Ping An and Xiao, until further court order, from carrying out any financial activities that would cause either of them to be deemed to be a financial institution under the section 5 of the AML/CFT Act.

Examples of suspicious transactions cited in Justice Toogood's judgement include;

(a) On 19 May 2014, four transfers from ......................to Ping An, totaling $170,000;

(b) On 11 June 2014, a $50,000 cash deposit by Mr Xiao to a customer, ................... ;

(c) On 9 July 2014 a $200,000 transfer from a customer, ..................., ................... to Ping An, followed by a $600,000 transfer from the same person to Ping An on 10 July 2014;

(d) On 24 July 2014, a $444,444 wire transfer from Ping An to a customer, .............. ....., followed by three separate payments from Ping An to that customer on 28 July of $150,000, $250,000 and $300,000.

The full judgment is here and below is a press release covering the key points.