FMA looking into directors, agents who help foreign firms cash in NZ's reputation

Tuesday 19th May 2015

The Financial Markets Authority says it is looking into New Zealanders who help foreign firms sign up on a local register of financial services providers and even act as directors, giving the entities a veneer of respectability they can cash in on overseas.

The regulator said it has removed 23 entities from the Financial Services Provider Register so far this year and prevented a further 20 from completing registration on the FSPR. The register is maintained by the Registrar of Companies but the FMA has the power to direct the registrar to remove companies "where it is likely that a company is giving a false or misleading impression about the extent to which it is regulated in New Zealand," the FMA said.

The entities register in New Zealand to take advantage of the nation's reputation for being well regulated. The FMA said it has received complaints from overseas investors who has lost money in forex companies and other service providers operating abroad with FSPR registration.

"We are aware of instances where the FSPR is not being used for its intended purpose," said FMA general counsel Liam Mason. "This is taking advantage of New Zealand's good reputation for being a well regulated jurisdiction and a good place to do business."

The regulator said it was concerned that local agents were helping such entities register, providing local registered office facilities and putting themselves up as a director.

"The FMA will look closely at the ability of such directors to carry out their duties under the Companies Act, especially where multiple directorships are involved," it said.

The FMA issued the statement to the NZX after details were reported by the NZ Herald, which cited Simone Robbers, the regulator's director of primary markets and investor resources, as saying the public didn't understand what the title Registered Financial Adviser (RFA) meant.

"The RFA is not a qualification," Robbers was quoted as saying. "It is a registration. It is not a level of professionalism or a suggestion they have a minimum qualification."

Revelations that the FSPR is being abused come after the government moved to crack down on New Zealand registered shell companies, with a law change requiring them to have a local director and details including the ultimate owner.

That follow reports in 2010 that a locally registered company, SP Trading, leased a plane to smuggle arms to Iran from North Korea. The plane was intercepted in Thailand.

BusinessDesk.co.nz

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