New Zealand FMA censures Western Union for licence breaches

The Financial Markets Authority (FMA) has censured Western Union Business Solutions (Australia) Pty Ltd for violating the derivatives issuer licence requirements for net tangible assets (NTA).

The Kiwi regulator’s Standard Conditions require derivatives issuers to maintain $1 million or 10% of average revenue, whichever is greater, as NTA at all times. The requirements further need half of that sum to be held in cash or other liquid assets. The regulation also prohibits any derivatives issuers with less than 90% of the required NTA from entering any transaction with clients without regulatory approval.

James Greig, FMA Director of Supervision said:

The net tangible assets obligations for licensed derivatives issuers are important requirements intended to reduce risks of client harm and loss.

According to the FMA, Western Union’s New Zealand business violated the NTA requirements at certain times from July 2019 to June 2021. The company maintained the ability to replenish the required NTA levels and provided services to clients without any issues and without exposing them to risks.

However, the regulator clarified that it is not sufficient for derivatives issuers to prove they can meet the provisions of their license, they should maintain the NTA requirements.

Greig added:

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.

The FMA acknowledged that Western Union self-reported, but it did not self-identify. Furthermore, the company has corrected its lapses quickly and taken remedial action against further violations.

Read Also: