Monday, October 26, 2020

Qatar: Wealth management firm fined for anti-money laundering failings


(QATAR) – The QFC Regulatory Authority (QFCRA) yesterday announced that it had taken action against Horizon Crescent Wealth LLC (HCW) and imposed a fine of QR30,000,000 on it for serious legal and regulatory breaches.

The action taken by the QFCRA followed an investigation of HCW identifying significant failings by the firm in its compliance with the Anti-Money Laundering and Combating Terrorist Financing Rules 2010 (AML/CFTR).

The investigation also found that HCW had held itself out as conducting an asset management business without authorisation from the QFCRA, which is a violation of the Qatar Financial Centre Law No (7) of 2005 (QFC Law) and the Financial Services Regulations (FSR). HCW was licensed in the Qatar Financial Centre (QFC) on February 4, 2015, as a trust administrator.

While trust administration does not require authorisation from the QFCRA, HCW was nevertheless required to comply with the AML/CFTR.

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During its investigation, the QFCRA identified serious deficiencies at HCW relating to its customer due diligence and the due diligence conducted by HCW on its customers’ source of funds and the nature of their economic activities.

These requirements, which are set forth in the AML/CFTR, are essential to protecting the QFC from abuse by illicit finance.

The QFCRAs investigation also identified that HCW had taken deliberate steps to mislead the QFCRA regarding its activities and that the firm had also marketed itself as providing asset management services when it was not authorised to do so by the QFCRA, which is a violation of the QFC Law and the FSR.

Following the action taken by the QFCRA, HCW appealed the enforcement action and the QR30mn fine to the Regulatory Tribunal.

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The appeal by HCW challenged whether the action taken by the QFCRA was correct and whether the fine was excessive.

On 19 March 2020, the Tribunal issued its decision finding in favour of the QFCRA.
The Tribunal’s decision also required HCW to pay the costs and expenses of the QFCRAs investigation and a portion of its costs relating to the appeal.

The QFCRA has expressed its gratitude for the close co-operation and significant assistance provided by the Qatar Central Bank, the Qatar Financial Information Unit, and the Public Prosecution Office during the course of the investigation.

The co-operation and assistance provided by each of the authorities was instrumental in ensuring a successful outcome to the investigation.

CEO of the QFCRA, Michael Ryan, welcomed the decision of the Tribunal, commenting: “Compliance with AML/CFT rules and regulations are essential to protect the reputation of the QFC.

The action taken emphasises the importance that the QFC and the State of Qatar place on protecting the financial system from illicit finance, and underscores the fact that firms and individuals that do not comply fully with the relevant laws and regulations will be subject to significant consequences.”

The QFC Regulatory Authority is an independent regulatory body established in 2005 by Article 8 of the QFC Law.

It regulates firms that conduct financial services in or from the QFC.
It has a broad range of regulatory powers to authorise, supervise and, when necessary, discipline firms and individuals.

The QFC Regulatory Authority regulates firms using principle-based legislation of international standard, modelled closely on that used in major financial centres.

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