During the inspections, the FCMC identified a number of violations of regulatory requirements in the activities of Renesource Capital, such as applying covert commissions, providing incomplete and untimely information on expenses and costs before and after a transaction, failure to timely notify a customer of planned costs and expenses before the provision of investment services or ancillary services, as well as shortcomings in internal governance.
In addition, an effective AML/CTPF internal control system, specific to the nature of Renesource Capital’s activities and to risks inherent in the services provided was not ensured, resulting in breaches of the AML/CTPF regulatory framework in particular with regard to customer due diligence and transaction monitoring.
As part of inspection, the FCMC concluded that Mārtiņš Priede, Chairman of the Board of Renesource Capital, as the responsible person for monitoring the AML/CTPF field, did not ensure that Renesource Capital took appropriate measures to guarantee effective functioning of AML/CTPF internal control system and independence of risk management functions, thereby exposing Renesource Capital to the money laundering and reputational risks.
When deciding on the administrative agreement and determining the amount of fine applicable, the FCMC took into account the fact that Renesource Capital had cooperated with the FCMC, including voluntarily eliminated most of identified infringements and started work to address the remaining deficiencies.
In order to avoid irregularities identified during the inspections, the administrative agreement includes the following measures which Renesource Capital undertakes to fully comply with in the time limits specified. Renesource Capital should provide an adequate and sufficient compliance monitoring and risk control system in line with the specific nature of the activities of Renesource Capital by the deadline specified by the FCMC, as well as take the necessary measures for enhancing the internal control system in the field of AML/CTPF and sanctions risk management under the requirements of the Financial Instruments Market Law.
For further information:
Head of Communications and Financial Literacy Division
Financial and Capital Market Commission