DFSA fines financial firm for serious and deliberate wrongdoing

Seema Bono of Pinsent Masons, the law firm behind Out-Law, was commenting after the Dubai Financial Services Authority (DFSA) recently imposed a fine of more than $600,000 on financial services firm La Tresorerie after it identified a number of concerns relating to the company's cash services. The DFSA is the regulator for the Dubai International Financial Centre (DIFC) free zone.

According to the DFSA, La Tresorerie, operated an illegal cash service for almost two years between February 2015 and January 2017. The company accrued fees worth approximately $220,000 from its activities, which included making use of fake invoices to transfer cash to customers, transporting cash to a foreign country associated with a high-risk of money laundering, and misleading banks about the nature and purpose of some transactions. The total amount of physical cash provided by the company under its cash service was in excess of $7 million over 122 transactions.

The DFSA said La Tresorerie was responsible for a number of breaches of its rules and had "demonstrated a fundamental failure … to conduct its business with integrity". The regulator clarified that the breaches were not carried out under the company's current management.

Following a long-running investigation which began in 2017, the DFSA fined the company  $612,790, including $261,154 disgorgement of the financial benefit it had received, plus interest. The DFSA reached a settlement with the company in relation to the findings of its investigation and the amount of penalty, although no settlement discount was applied to the penalty element of the fine. 

Bryan Stirewalt, chief executive of the DFSA, said: "The illegal cash service provided by La Tresorerie was a serious breach of DFSA rules, further compounded by the senior management’s attempts to disguise this business activity. This activity demonstrated a clear lack of integrity, and opened the firm up to a high risk of money laundering, as well as placing client money at undue risk. We will take strong action against any firm or individual who demonstrates such a risk to the DIFC."

Seema Bono said that the action taken by the DFSA demonstrated its strong and continuing commitment to invest time and resources into investigating and identifying serious failings and wrongdoing.

"The UAE more broadly has embarked on a number of initiatives to clamp down on money laundering having recently strengthened the AML regime," she said. "The DFSA has also enhanced its regime recently. In June 2019, the UAE Central Bank's Financial Intelligence Unit, in collaboration with the United Nations Office on Drugs and Crime, launched a new reporting software, goAML. This is designed to facilitate the receipt, management, analysis and dissemination of suspicious transaction and activity reports. While there remain considerable challenges in the road ahead, the use of such innovative platforms and increased enforcement activity should act as credible deterrents in the UAE’s fight against financial crime."