The structured products specialist runs the danger of running afoul of the country's anti-money laundering and terrorism finance regulations, with the potential infractions related to offshoring and due diligence.
The German subsidiary of Swiss derivatives specialist Leonteq hasn't been doing its homework to prevent financial crime, with German regulator BaFin issuing a reprimand (German only) against them earlier this week. The findings came up during an annual regulatory review and it is now legally required to remediate the deficiencies.
The key deficits related to offshoring activities and due diligence. According to BaFin, Leonteq (Europe) failed to report or indicate the internal security measures it planned to offshore. It also failed to find evidence of relevant signed contracts and a control framework pertaining to such processes.
Adherence to due diligence requirements was also not deemed sufficient, with related information not adequately documented or properly stored. Under BaFin regulation, these vary based on the business and client risk ratings.
No Fine
«Leonteq is committed to a strict risk management and compliance framework and it regrets the deficiencies found in its German subsidiary», a Leonteq spokesperson said in reply to finews.com.
The company makes constant efforts to strengthen its compliance framework and has instituted a number of measures related to organizational personnel changes in recent months. «Leonteq is cooperating with BaFin and it has already mitigated a number of the findings. Most of the work should be concluded by the end of the year. BaFin did not announce a fine.»
Media Accusations
A year ago, the «Financial Times» reported that Leonteq had been potentially involved in a suspected attempt at money laundering and tax evasion. At the time, as finews.com reported, Leonteq decisively refuted the allegations.
