This year, the Dubai Financial Services Authority (DFSA) took stringent measures against a company that mishandled client investment funds and an individual implicated in money laundering. In one instance, a former relationship manager was fined nearly $1 million (approximately Dh3.6 million) for deceptive practices and for aiding the money laundering tactic known as layering.
"In layering, a series of transactions are conducted to create the illusion that the money has been transferred from one person to another, when in reality, it's the same person or group controlling the funds," explained Patrick Meaney, head of enforcement at DFSA. "Thus, he was aware that these individuals still controlled the money." Patrick further noted that the individual, identified as Peter Georgiou, concealed crucial information. "He provided misleading information to his compliance department to enable the illicit activities to persist, and he accrued significant bonus income from the commissions generated by those clients," he stated.
Meaney emphasized that this warranted the substantial fine imposed on the manager, who was also prohibited from ever working in the industry again. "This marked the end of his career," he said. "Such actions are crucial from a deterrence standpoint because firms might otherwise view such misconduct as a mere cost of doing business. However, for individuals, the consequences are severe. Their career is terminated, and they must pay a hefty sum." Patrick was speaking at a media roundtable that highlighted the authority's enforcement efforts and provided insights into recent actions.
In another case, OCS International Finance was fined for misappropriating clients' funds. Patrick detailed the incident. "They deceived a bank about the nature of certain deposits and subsequently misused the funds," he said. "These were client funds that they were obligated to safeguard. According to regulations, they should have kept the funds in a separate account. Instead, they lent the money to a related entity without informing the client, and that entity failed to repay the loan, leading to significant issues."
Ian Johnston, CEO of DFSA, elaborated on the thorough investigation process. "We adhere to proper procedures," he said. "For an investigation, we typically gather data, scrutinize it, review extensive communications, and conduct interviews to comprehend the situation." Patrick added that while the process could span several months, it usually took close to a year to complete. He also observed that this year's cases were less severe in terms of the size of the firms involved and the nature of the violations compared to last year, suggesting a potential improvement in compliance.
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