• Home
• /
• UAE
• /
• Crime

Dubai: Dh3.6-million fine against banker, huge penalty for misusing client's funds among actions taken against money laundering

The authority conducts a thorough investigation into the complaints it receives and follows a proper process that could take several months

This year, the Dubai Financial Services Authority (DFSA) took strict action against a company that mismanaged client investment funds and an individual involved in money laundering. In one case, a former relationship manager was fined nearly $1 million (around Dh3.6 million) for deceptive conduct and for facilitating the money laundering technique known as layering.

"In layering, what goes on is they do a series of transactions to create the impression that the money has gone from one person to another, whereas it's the same person or it's the same people who are running the whole thing," said Patrick Meaney, head of enforcements at DFSA. "So, he knows that these people still control that money."

Meaney added that the individual, a privater banker identified as Peter Georgiou, withheld information. "He gave false information to his compliance function to allow that activity to continue, and he generated quite a lot of bonus income as a result of the commissions from those clients," he said.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

He explained that this justified the huge fine on the manager, who was also banned from working in the industry again. "It became career-ending for him," he said. "Those sorts of actions are very important from a deterrence point of view because firms often might treat that as just a cost of doing business. But for individuals, that's very serious.  Your career is over, you've had to pay out a large sum of money."

Meaney was speaking during a media roundtable that outlined the authority's enforcement outreach initiatives and gave insights into recent actions.

Misusing funds

Another company, OCS International Finance, was fined for misusing clients' funds. "They misled a bank about the nature of some money which they had deposited, and they then also misused the money," Meaney said. "That was client money which they had to protect. Under the rules, they had to keep it in a separate account. They didn't do that, but worse, they lent that money to a related party without telling the client they were doing it. That related party then didn't repay the money, which was obviously quite a big problem."

Ian Johnston, chief executive of DFSA, explained that the authority conducts a thorough investigation into the complaints it receives. "We have proper processes that we must follow," he said. "For an investigation, normally, you have to get data, evaluate that data, review large numbers of communications, and then interview people to understand what's going on."

Meaney added that this process could take several months but usually took close to a year to complete. He also added that the authority had observed that this year's cases are not as "serious in terms of size of the firms committing the breaches and the nature of the breaches" as compared to last year, and he hoped that it was a sign that people had learnt from previous sanctions and were more "compliant".

ALSO READ:

• Dubai: Residents warned against scammers posing as top officials, faking documents

• UAE launches digital platform to provide accurate data for financial transactions

• CBUAE set to launch region-first AML technology