Dubai’s DFSA fines former DIFC employee $165,000

The Dubai Financial Services Authority (DFSA) has levied a fine of $165,000 against Ashish Bhandari – a former relationship manager with a private bank in Dubai International Financial Centre (DIFC) – due to his involvement in breaches of anti-money laundering regulations.

The authority has also restricted him from performing any function in connection with the provision of financial services in or from the DIFC.

On September 17, 2020, the DFSA decided to take enforcement action against Bhandari for being knowingly involved in breaches of Anti-Money Laundering (AML) legislation from 2011 to 2013 and for obstructing the DFSA in 2017 and 2018, a statement said. However, the DFSA did not make a finding that Bhandari had engaged in money laundering.

The DFSA found that Bhandari was the director and registered beneficial owner of an offshore entity registered in the British Virgin Islands (BVI), which had been set up with an introducer of his employer. Bhandari arranged for the introducer’s referral fees to be paid by his employer to the BVI entity without disclosing his involvement in the entity to his employer. He was also instructed by certain of his clients to transfer money to the BVI entity.

However, Bhandari’s employer thought the BVI entity was owned and controlled by the introducer. From the money transferred into the BVI entity, large sums were then transferred to Bhandari’s personal bank accounts outside the UAE.

The DFSA found that, by not disclosing his outside activities and involvement in the BVI entity, he was able to maintain the fund routing arrangements and thereby retain clients. His employer also failed to properly verify the identity and ownership of the BVI entity in accordance with its AML obligations, and accepted Bhandari’s assertions. Bhandari also provided misleading or deceptive information to the authority, the statement said.

Hence it took strict action to “uphold the integrity of the DIFC and to protect users of the financial services industry”.

The primary accused referred the matter to the Financial Markets Tribunal on October 18, 2020. As a result of a settlement agreement reached with the DFSA, he has since withdrawn that referral.

In a statement, Bhandari said the DFSA decision arose from his involvement in a “private arrangement” he had with an introducer.

“Although I appealed the DFSA decision to the Financial Markets Tribunal, I eventually agreed to settle the matter with the DFSA for personal reasons and in order to put the matter behind me,” he said.

Bryan Stirewalt, CEO of the DFSA, said: “Employees at authorised firms have a duty to act with integrity and professionalism, even more important for those employees who are responsible for dealing directly with clients and investors. When called to give an account of their knowledge and actions, the DFSA expects complete honesty and transparency. Anything short of that will result in significant penalties and restrictions. The fine is higher than it would have been as the DFSA has previously imposed sanctions for highly similar misconduct. We expect standards to improve and we will hold to account those who fail to learn.”