Swiss fintech Leonteq strongly refutes recent whistleblower allegations of money laundering and tax evasion. It also gave an update on its business.
An article published by the «Financial Times» (behind paywall) on Monday said that whistleblowers made allegations of money laundering and tax fraud against Leonteq and that its auditor EY which conducted a special investigation of the Swiss fintech was not sufficiently independent.
The allegations revolved around two products issued by Leonteq and distributed by a company based in the British Virgin Islands (BVI), «vaguely referring to potential tax evasion or money laundering by third parties», Leonteq said in a statement Wednesday.
Strongly Refutes Allegations
«Leonteq strongly refutes these allegations, which were first raised internally in 2021 and were thoroughly investigated by Leonteq’s Compliance department. This investigation found no evidence that would corroborate the suspicions raised», Leonteq said. It went on to say that it has a «strict zero-tolerance policy regarding non-compliant business behavior».
Special Investigation
In addition to the internal investigation, the company's board of directors mandated that an independent EY team carry out a special investigation. In March of this year, Leonteq changed auditors, and the decision to commission EY was related to Leonteq’s ongoing tender process to renew its external audit mandate, replacing PricewaterhouseCoopers. This was done «in order not to conflict with accountancy firms participating in the tender process». As Leonteq’s internal auditor, EY did not participate in the tender, and the separate EY team performing the special investigation was operating autonomously, according to Leonteq.
The special investigation confirmed that «with respect to all relevant trades, no indication exists that would justify the allegations of money laundering or tax evasion». Internal and external legal and compliance specialists concluded there was no basis to file a Suspicious Activity Report (SAR).
Distribution Partners
Leonteq pointed out that its distribution partners are third-party financial intermediaries that are also required to comply with laws and regulations applicable to their business, including anti-money laundering rules, as well as agreed-upon distribution agreements with Leonteq. If it detects a breach of those agreements, it said it takes immediate appropriate action, while the distribution partners remain responsible for their adherence to applicable requirements.
Business Update
Following its strong first-half results, Leonteq continues to maintain a prudent approach to risk management and saw its trading result continue to compensate for subdued client demand so far in the second half. It is therefore «on track» to meet its previously announced guidance of exceeding the prior year’s record group net profit of 155.7 million Swiss francs, translating into EPS of 8.47 francs for the full-year 2022.
