[UPDATED] Despite a warning InvestNow is alleged to have beached AML laws

The Financial Markets Authority alleges InvestNow has breached AML laws and its failures are "significant and, in some respects, systemic." [UPDATED] InvestNow's response added.

Friday, December 20th 2024, 5:23PM

Back in September 2022 the regulator warned InvestNow about for failing to comply with AML/CFT Act requirements. It said the company was not "conducting customer due diligence to the extent required by the Act, and having adequate and effective processes and procedures."

Now the regulator has filed civil proceedings against InvestNow for alleged AML/CFT breaches.

Since 2022 InvestNow was bought by global platform business Apex.

In its court filing the FMA alleges that InvestNow breached the AML/CFT Act by:

Failing to establish, implement and maintain an adequate AML/CFT programme
Failing to obtain information on the nature and purpose of the proposed business relationship between customers and InvestNow
Failing to conduct enhanced customer due diligence
Failing to adequately conduct account monitoring
Failing to terminate business relationships when required

After issuing the warning, the FMA opened an investigation into InvestNow’s compliance with the Act and concluded that the extent of InvestNow’s non-compliance warrants the commencement of civil proceedings.

It considers InvestNow’s failures to be "significant and, in some respects, systemic." The FMA alleges that the breaches predominantly occurred from late-2018 to late-2022.

The FMA is seeking a declaration from the Court that InvestNow breached the AML/CFT Act and that a pecuniary penalty is to be paid to the Crown. The proceedings were filed in the High Court in Wellington.

Earlier this month InvestNow said it had "capped its biggest growth year since the Covid pandemic by topping $2 billion in funds under management.

"InvestNow has grown 30% over the past year, topping 30,000 customers across managed funds, term deposit and KiwiSaver portfolios, and cementing itself as one of New Zealand’s leading investment platforms," the company said in a press release.

InvestNow general manager Mike Heath says the last year has been particularly strong for in-house PIE funds and KiwiSaver.

Heath said he was "encouraged about continued growth in 2025, with a new platform, an expanded range of investment options based on in-demand customer options, and a focus on leveraging more capability from InvestNow’s parent organisation, Apex Group."

“What impresses me the most is how we are able to provide a proposition and customer experience for more than 30,000 customers with a relatively small, local team.

“It’s pretty amazing to have built such a successful, scalable business that has customer experience right at the forefront of everything we do, but it speaks to the talent and drive of our people,” he said.

InvestNow's response to FMA

InvestNow is disappointed with the Financial Markets Authority's (FMA) announcement today. Throughout its operations, InvestNow aspires not only to comply with but to exceed the FMA's expectations.

The claim outlined in the FMA announcement relates to events between 2018 and early 2022 that were addressed in a public formal warning released by the FMA in 2022. InvestNow fully complied with all actions the FMA required of it in response to that formal warning.

InvestNow's Anti-Money Laundering (AML) programme was reviewed by the FMA in 2017/18, just prior to these events. During the same period, InvestNow's AML programme was also subject to regular external audits.

Since the onset of the FMA investigation in 2021, InvestNow has fully cooperated with the FMA. The investigation did not identify any evidence of consumer harm or money laundering.

During the subsequent three-year period InvestNow met every deadline the FMA imposed and complied with all requests and required remediation actions.

InvestNow does not intend to make any further comment while this matter remains before the courts.

Tags: FMA InvestNow