New Zealand’s financial industry watchdog, Financial Markets Authority (FMA), has censured Western Union Business Solutions (Australia) Pty Ltd for violating net tangible assets (NTA) requirements for a derivatives issuer license holder.
Under the Standard Conditions required by the Kiwi regulator, derivatives issuers need to maintain at least $1 million or 10 percent of average revenue, whichever is greater, as NTA all the time. Further, half of that sum should be held in cash or other liquid assets.
Moreover, the regulations prohibit any derivatives issuers with less than 90 percent of the required NTA from entering any transaction with clients without regulatory approval.
“The net tangible assets obligations for licensed derivatives issuers are important requirements intended to reduce risks of client harm and loss,” said James Greig, the Director of Supervision at FMA.
Mandatory Requirements
In the case of Western Union, which received the New Zealand license in 2015, the FMA found that the local unit of the remittance platform violated the NTA requirements at certain times from July 2019 to June 2021. However, the company maintained the ability to replenish the required NTA levels and offered services to clients without any issues without exposing them to risks.
The FMA clarified that derivatives issuers should maintain the NTA requirements, and it is not sufficient to only prove that they can meet the requirements.
“Western Union’s contraventions left open the possibility of client harm and loss, and its continued entry into transactions that gave rise to further liabilities increased the possibility of harm. We were concerned about the significant number and value of transactions that occurred while Western Union was in breach, as well as the duration of the breach, making this a material contravention,” Greig added.
Moreover, the FMA acknowledged that the violations came to its recognition after Western Union self-reported, but not self-identified, its licensing obligations. Furthermore, the company has rectified the lapses and ensured prevention against such violations in the future.
New Zealand’s financial industry watchdog, Financial Markets Authority (FMA), has censured Western Union Business Solutions (Australia) Pty Ltd for violating net tangible assets (NTA) requirements for a derivatives issuer license holder.
Under the Standard Conditions required by the Kiwi regulator, derivatives issuers need to maintain at least $1 million or 10 percent of average revenue, whichever is greater, as NTA all the time. Further, half of that sum should be held in cash or other liquid assets.
Moreover, the regulations prohibit any derivatives issuers with less than 90 percent of the required NTA from entering any transaction with clients without regulatory approval.
“The net tangible assets obligations for licensed derivatives issuers are important requirements intended to reduce risks of client harm and loss,” said James Greig, the Director of Supervision at FMA.
Mandatory Requirements
In the case of Western Union, which received the New Zealand license in 2015, the FMA found that the local unit of the remittance platform violated the NTA requirements at certain times from July 2019 to June 2021. However, the company maintained the ability to replenish the required NTA levels and offered services to clients without any issues without exposing them to risks.
The FMA clarified that derivatives issuers should maintain the NTA requirements, and it is not sufficient to only prove that they can meet the requirements.
“Western Union’s contraventions left open the possibility of client harm and loss, and its continued entry into transactions that gave rise to further liabilities increased the possibility of harm. We were concerned about the significant number and value of transactions that occurred while Western Union was in breach, as well as the duration of the breach, making this a material contravention,” Greig added.
Moreover, the FMA acknowledged that the violations came to its recognition after Western Union self-reported, but not self-identified, its licensing obligations. Furthermore, the company has rectified the lapses and ensured prevention against such violations in the future.
