Regulators in New Zealand filed a lawsuit on Tuesday against the local arm of Hong Kong-based foreign-exchange trader CLSA Premium, accusing the company of breaching anti-money-laundering and terrorism financing laws. The Financial Markets Authority (FMA) accused CLSA Premium New Zealand, formerly known as KVB Kunlun New Zealand, of failing to conduct sufficient customer due diligence, failing to report suspicious transactions and failing to keep required records on numerous occasions. “The anti-money-laundering legislation is a cornerstone to protecting the integrity of New Zealand’s financial system and it’s imperative that financial services firms ensure they are compliant,” Nick Kynoch, the FMA’s general counsel, said in a press release. “CLSAP NZ needs to be held to account and our approach sends an important message of deterrence to the industry.” CLSA Premium New Zealand did not respond to a request for comment. A person who answered the phone at the company’s Hong Kong offices referred all inquiries to its Auckland office. The regulator said transactions at issue occurred between April 2015 and November 2018, and involved about NZ$50 million (US$32 million). The maximum penalty for each alleged breach is NZ$2 million, according to the FMA. DBS CEO Gupta warns of correction on market disconnect, IMF downgrade looms The FMA said it had filed its civil proceedings in the High Court in Auckland and was seeking monetary penalties and court costs. The court filing was not immediately available on Tuesday. CLSA Premium’s majority owner is Citic Securities, which is also the parent company of brokerage and investment bank CLSA. The company is not directly affiliated with CLSA. Citic Securities paid HK$780 million (US$100.6 million) in 2015 for a majority stake in the forex trader, which was known at the time as KVB Kunlun. CLSA Premium changed its name last year, saying in a stock exchange filing at the time that the change was to “better reflect that the group is part of the substantial shareholder’s group of entities, including CLSA group”. The company said in its annual report in April that the rebranding was to “differentiate itself from unaffiliated entities that are using a similar name and conducting a similar business”. AIA gets go-ahead to convert Shanghai branch into local subsidiary CLSA Premium reported an annual loss of HK$180 million last year, compared with a profit of HK$34.2 million in 2018. Its revenue fell to HK$16.1 million in 2019, compared with HK$471.1 million in the prior year. The company attributed its net loss to a reduction in leveraged forex trading because of a decline in customers and reduced volatility in the currency markets last year, a tightening of rules in Australia, Hong Kong and New Zealand for leveraged forex trading, and a global economic slowdown. Last year, CLSA Premium also jettisoned a number of Chinese clients who could not prove they lived outside the mainland. The company’s chief executive and chief financial officer also resigned last July in a dispute with its directors. CLSA Premium’s shares are lightly traded, last closing on Monday at 23 HK cents.