Middle East

DFSA Fines La Tresorerie for Serious Failings

The Dubai Financial Services Authority (DFSA) has announced that it has fined La Tresorerie USD612,790, including USD261,154 disgorgement of the financial benefit La Tresorerie received, plus interest.

The DFSA has taken this action against La Tresorerie due to multiple, serious breaches of DFSA legislation, mainly arising from conducting an illegal service that provided physical cash to its clients (Illegal Cash Service), according to a press release by the DFSA.

The DFSA has taken this action to penalise La Tresorerie, deter others and protect clients, the regulator has said in a press release.

The Illegal Cash Service was in systematic operation for almost two years, between February 2015 and January 2017, and was carried on with the knowledge and involvement of La Tresorerie’s senior management at that time. The current senior management of La Tresorerie were not involved in the Illegal Cash Service and reported it to the DFSA upon discovering it.

In particular, the Illegal Cash Service involved the use of false invoices and transferring client money to unregulated companies outside of the Dubai International Financial Centre (DIFC); involved the transportation of large amounts of physical cash from the UAE to a foreign country, which is associated with a high risk of money laundering; led to La Tresorerie misleading its custodian and a bank about the nature and purpose of certain transactions, when AML due diligence enquiries were made; and demonstrated a fundamental failure of La Tresorerie to conduct its business with integrity.

The DFSA’s investigation found more than 100 transactions had been carried out as part of the Illegal Cash Service, ranging in value from EUR2,560 to EUR500,000, according to the DFSA release. The total amount of physical cash provided by La Tresorerie was calculated to be the equivalent of over USD7.3 million and the fees the firm received were the equivalent of almost USD220,000. An amount equivalent to these fees, plus interest of over USD41,000 is included in the financial penalty imposed on La Tresorerie as disgorgement.

The DFSA was able to reach a settlement with La Tresorerie in respect of the findings of its investigation and the amount of penalty. This settlement was, however, reached after the period that the DFSA had set for a settlement discount to be available. If settlement had been achieved during that period, La Tresorerie would have been able to obtain a 30% discount to the fine imposed. Before taking any action to enforce payment of the fine, the DFSA will consider the firm’s circumstances at that time and the corresponding implications of enforcing the fines for the firm’s clients.

Bryan Stirewalt, Chief Executive, 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.”