The Dubai Financial Services Authority (DFSA) has imposed a fine of $980,020 (AED 3,599,613), after settlement discount, on Peter Georgiou, for misleading and deceptive conduct and for being knowingly involved in breaches of DFSA rules by his former employer Mirabaud (Middle East) Limited (MMEL) – an international banking group established in Switzerland.

In a statement the DFSA said Georgiou was employed by MMEL as a private banker in the role of relationship manager (RM) and had responsibility for managing a portfolio of clients. The DFSA’s investigation focused on the activities of nine interconnected MMEL clients, brought in to MMEL by Georgiou and for which he was the RM.

These clients were onboarded and retained as clients by MMEL based on false or misleading Customer Due Diligence (CDD) and ongoing CDD information provided by Mr Georgiou. During the period June 2018 to October 2021, a total of 27 transfers, amounting to $123.5m, were made between seven of these accounts.

In addition, 68 transfers to third parties (which was prohibited by MMEL’s policy) totalling $39.8m over a two-year period were carried out by MMEL on the basis of inconsistent and inadequate supporting documentation. These patterns of transactions had characteristics consistent with money laundering, said the DFSA.

In particular, the DFSA found that Georgiou:

• knowingly provided misleading information to MMEL’s compliance team and withheld relevant information in order to circumvent MMEL’s anti-money-laundering (AML) systems and controls;
• knowingly sent a forged deceptive and misleading email to a client; and
• provided false, misleading, or deceptive information to the DFSA during an interview.

In addition to the financial penalty, the DFSA has also banned Georgiou from holding office or being employed by a DFSA-authorized firm. He is also restricted from performing any function in connection with the provision of financial services in or from the Dubai International Financial Centre (DIFC).

The DFSA determined that Georgiou lacked integrity and is not a fit and proper person to be involved in the provision of financial services in or from the DIFC.

Inadequate AML systems and controls

In July 2023, the DFSA fined MMEL $3m for inadequate AML systems and controls.

Georgiou was also found to be knowingly involved in MMEL’s failure to conduct due diligence on existing customers at appropriate times, particularly when there was doubt about the veracity and adequacy of provided documents or suspicion of money laundering; and in a failure to perform adequate assessment of clients’ financial markets experience when classifying them as Professional Clients.

Ian Johnston, Chief Executive of the DFSA, said: “The DFSA expects those working in financial services within the DIFC to comply with the DFSA’s AML rules. We also expect firms and individuals to engage with the DFSA in an open and honest manner, and to uphold the highest standards of integrity.

The DFSA remains committed to holding those who fail to meet these expectations to account. The sanctions imposed on Mr Georgiou reflect the severity of his misconduct and serve as a strong warning to others who may consider engaging in similar behaviour.”

A copy of the decision notice is available on the DFSA website.

Tips and best practice for firms

Lessons learned from this decision indicate firms should:

• Assess current due diligence and onboarding of private banking clients practices.
• Enhance employee training and education to make sure employees are up to date with their local authority’s conduct of business rules.
• Emphasize the the importance of ethical behavior and the negative impact misconduct can have on a firm’s reputation.
• Implement effective monitoring systems to identify potential red flags and address issues promptly.
• Ensure supervisory oversight is adequately supported at a Board level and adequately equipped monitoring and surveillance systems are in place.
• Foster a strong compliance culture with open communications between departments.
• Maintain continuous improvement across all practices with regular reviews, industry best practices and risk assessments.