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IIROC Imposes $250,000 Fine on Laurentian Bank Securities Inc.

IIROC Imposes $250,000 Fine on Laurentian Bank Securities Inc.

by | Apr 24, 2020 | Compliance Updates, iComply Insights

IIROC Imposes $250,000 Fine on Laurentian Bank Securities Inc.

The Investment Industry Regulatory Organization of Canada fines Laurentian Bank Securities Inc. US$250,000 for not using a transaction monitoring system

What Happened?

April 16, 2020: Laurentian Bank Securities Inc.–a regulated investment dealer under the jurisdiction of the Investment Industry Regulatory Organization of Canada (IIROC)–was charged with failing to implement and maintain an adequate trading supervision system, which resulted in the organization failing to comply with AML obligations.

In a hearing that took place on April 24, 2020, the IIROC Hearing Panel accepted a settlement agreement, according to which Laurentian Bank Securities Inc. agreed to pay US$250,000 in fines.

Source: https://www.iiroc.ca/Documents/2020/227d22f8-bca1-49f9-8161-157d63ea9ffd_en.pdf

Who Is Impacted?

Businesses that facilitate the trading or exchange of regulated assets–including equities, debt, derivatives, and cryptocurrencies.

Why This Matters?

Failing to have a transaction monitoring system in place creates the risk of money laundering going unnoticed within your business.

Transaction monitoring is a requirement that, when overlooked, will result in staggering fines, sanctions, and damage to the integrity of your brand’s reputation.

What’s Next?

IIROC’s Trading Conduct Compliance department (TCC) is tasked with regularly examining and testing their participant’s transaction monitoring systems to identify any problems or concerns.

Laurentian Bank Securities Inc. will be required to address these concerns and to correct the deficiencies. Going forward, the firm can expect to face increased scrutiny and reputation damage and will continue to appear in AML screening for Adverse Media and Watchlists for years to come.

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

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US SEC Charges Dropil and team for Fraudulent and Unregistered ICO

US SEC Charges Dropil and team for Fraudulent and Unregistered ICO

by | Apr 24, 2020 | Compliance Updates, iComply Insights

US SEC Charges Dropil and team for Fraudulent and Unregistered ICO

U.S. Securities and Exchange Commission (SEC) charges founders and issuer of Dropil, Inc. with securities fraud

What Happened?

April 24, 2020: Between January and March 2018, Jeremy McAlpine, Zachary Matar, and Patrick O’Hara of Dropil, Inc. marketed the DROP token offering online to investors around the world.

In promoting the offering, Dropil promised to pool the capital raised for building and investing with their algorithm-based “Dex Bot”. Dropil promised investors the “Dex Bot” would provide returns from this activity in the form of DROP Tokens deposited into their wallets every 15 days. However, Dropil never made any deposits to investors’ wallets, nor performed any development of the aforementioned “Dex Bot”.

The U.S. SEC (United States Securities and Exchange Commission) also found that Dropil claimed to have raised a total of USD $54 million from 34,000 investors–despite only raising $1.8 million from no more than 2,500 investors. In addition to this falsified evidence and testimony, the founders of Dropil were found to have used the money raised to fund other projects, as well as their own personal bank accounts.​

Source: https://www.sec.gov/litigation/litreleases/2020/lr24804.htm

Who Is Impacted?

Any issuer of a virtual asset who has failed to properly register their offering as a security, or has chosen to market it with false and misleading statements, or promises of potential returns.

Why This Matters?

2,500 investors lost $1.8 million in this scheme. The action taken by the SEC is evidence that they have both the authority and technical ability to monitor, investigate, and take action against the bad actors operating illegally in the digital capital markets, without prejudice.

What’s Next?

Issuers of “utility tokens”, security tokens, cryptocurrencies, etc., who used their virtual asset to either raise capital, secure investment, or generate pre-sales will continue to fall under scrutiny.

  • Was the offering registered with the proper authority?
  • Was the opportunity marketed in a lawful manner and with integrity?
  • Are the funds that were raised being used in the manner that they were presented to potential purchasers?

Such firms should seek independent legal advice to consider whether they may be exposed to this type of risk.

The SEC action against the Dropil ICO is yet another case study in what can put an issuer offside–and land them in court–in the U.S. market.

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

IIROC Imposes $250,000 Fine on Laurentian Bank Securities Inc.

BCSC Advisory Regarding Pegasus Global Trading Limited

by | Apr 23, 2020 | Compliance Updates, iComply Insights

BCSC Advisory Regarding Pegasus Global Trading Limited

BCSC (British Columbia Securities Commission) adds Pegasus Global Trading Ltd. to the province’s Investment Caution List

What Happened?

April 23, 2020: Pegasus Global Trading Ltd., which claims to be a UK-based online trading platform, was found to be advertising their services to the residents of British Columbia without the required licensing

Pegasus is neither registered to trade in, nor advise on, securities and derivatives in Canada. According to Canadian legislation, Pegasus’ activities were regulated and the firm has been added to the IOSCO warnings list.

Source: https://www.bcsc.bc.ca/Enforcement/Investment_Caution_List/Pegasus_Global_Trading_Ltd_/

Who Is Impacted?

Any Canadian citizen who may have utilized Pegasus Global for advisory or investment-related services. North American businesses engaged in similar business activities or direct business relationships with Pegasus.

Why This Matters?

The BCSC’s Investment Caution List helps Canadian investors identify if they are at risk of a total loss of capital–with no recourse for recovery–when dealing with unlicensed service providers operating outside Canada’s regulatory oversight.

What’s Next?

By adding Pegasus Global Ltd. to the Investment Caution List, the BCSC has sent a clear message that these unlawful practices of promoting an unlicensed business can result in public enforcement. Appearing on these lists will damage a companies reputation and create barriers to their growth.

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

SFC Fines BOCOM US$19.6 million for Internal Control Failures

SFC Fines BOCOM US$19.6 million for Internal Control Failures

by | Apr 20, 2020 | Compliance Updates, iComply Insights

SFC Fines BOCOM US$19.6 million for Internal Control Failures

Hong Kong’s Securities and Futures Commission (SFC) has reprimanded and fined BOCOM International Securities Limited (BISL) for a range of regulatory breaches

What Happened?

April 20, 2020: BOCOM International Securities Limited (BISL) was reprimanded and fined by Hong Kong’s Securities and Futures Commission (SFC) for a total of US$19.6 million due to a range of regulatory breaches and internal control failures.

The SFC found that third-party deposits made to client accounts in 2009, 2011, and 2015 by way of cheques and bank transfers were not identified until 2016. BISL’s failure to ensure compliance with the guidelines on Anti-Money Laundering and Counter-Terrorist Financing is a significant reason for their 8-figure fine.

Source: https://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=20PR36

Who Is Impacted?

BISL’s clients, because the firm failed to ensure that:

  • transactions conducted in client accounts were properly authorized;
  • it could be satisfied on reasonable grounds about the identity of the person ultimately responsible for originating the instruction in relation to a transaction, and that order instructions were properly recorded;
  • client identities and transaction details were properly confirmed in trade confirmations;
  • it reported its representatives’ failures to record order instructions to the SFC immediately; and
  • a client complaint was adequately investigated and promptly responded to.

Why This Matters?

The lack of AML, CTF, and KYC due diligence on the transactions from 2009 to 2015 put both the clients of BISL at risk of financial fraud, as well as the public at risk of money laundering and terrorism financing, as transactions went unchecked and unmonitored until 2016.

What’s Next?

The SFC took into account all relevant circumstances, including the following:

  • BISL has an otherwise clean disciplinary record;
  • BISL has taken steps to revise its policies and procedures in relation to the areas where deficiencies were identified;
  • BISL has agreed to engage an independent reviewer to conduct a review of its internal controls; and
  • BISL’s failures are serious, extensive, and lasted for a substantial period of time.

The SFC concluded its decision with the following statement:

“A clear message needs to be sent to the industry that the SFC will not hesitate to take action against licensed corporations that fail to put in place appropriate internal controls to protect their operations and clients.”

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

iComply and Quantoz to Power Stablecoin Blockchain Applications for Financial Service Providers

iComply and Quantoz to Power Stablecoin Blockchain Applications for Financial Service Providers

by | Apr 20, 2020 | News & Events, Press Releases, Updates

iComply and Quantoz to Power Stablecoin Blockchain Applications for Financial Service Providers

Partnership enables organisations to launch compliant business processes on public blockchains without the need for technical knowledge of digital wallets or blockchain technology

Vancouver, B.C., and Utrecht, NL – April 20, 2020 – iComply Investor Services (“iComply”), a regtech leader in compliance for financial services providers, and Quantoz N.V., the provider of NEXUS, a SaaS platform that enables compliant fiat-to-virtual asset transfers, are announcing their shared solution to address the technical and compliance challenges that regulated firms face when using public blockchains.

Stablecoins – digital assets that are secured by real-world assets such as fiat currency – are being explored by central banks in Canada, the United Kingdom, and the European Union as one of the most promising applications for blockchain technology in finance. Compared to physical currency, stablecoins provide lower operating costs, increased transparency, and real-time reconciliation capabilities as a new form of contactless cash.

While hundreds of new ventures have launched blockchain solutions, most struggle with maintaining their accounting, reporting, and compliance to an institutional standard. This results in many innovative projects failing, due in large part to their failure to meet regulatory requirements.

Henri de Jong, Co-founder and Chief Business Development Officer of Quantoz, said: “Companies operating in the blockchain space, are increasingly subject to regulation. Cooperation with iComply helps our NEXUS customers to dynamically comply with regulatory rules and procedures across multiple jurisdictions.”

Integration of the NEXUS platform with iComply’s intelligent AML management solution will allow financial services providers to mitigate compliance risk while using public blockchains. This compliance-by-design methodology enables firms to identify risk, automate transaction monitoring, and scale back-office operations.

“In order to successfully manage a stablecoin, the issuer needs to manage complicated technical, regulatory, and compliance requirements,” said Matthew Unger, CEO of iComply. “By integrating NEXUS with iComply we can help private banks, corporations, and central banks to easily test and deploy digitally native assets.”

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About iComply Investor Services Inc.
iComply Investor Services Inc. (“iComply”) is a Regtech company that provides fully-digital KYC and AML compliance solutions for non face-to-face financial and legal interactions. iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience. By partnering with multinational technology vendors such as Microsoft, DocuSign, Thomson Reuters and Refinitiv, iComply is bringing compliance teams into the digital age. Learn more: www.icomplyis.com

About Quantoz:
Quantoz enables its clients to easily integrate tokens into their business with NEXUS, a SaaS solution that connects traditional financial “fiat money” with public blockchains.

 

iComply Contact Info:
Matthew Unger, CEO [email protected]
Vancouver, Canada

Quantoz Contact Info:
Nick Haasnoot, CEO [email protected]
Utrecht, Netherlands