Tauranga-based Craigs Investment Partners has been formally warned by the Financial Markets Authority of not sufficiently investigating a client's background under money laundering regulations.

The warning against one of the country's largest private money managers is under section 80 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

The law requires reporting entities to conduct enhanced due diligence on clients where the level of risk involved is such that this higher standard of customer due diligence should apply.

Craigs admits that it breached the act because it failed to conduct adequate enhanced due diligence and/or failed to terminate its business relationship with a client when it had been unable to complete the required level of customer due diligence on that client.

It was a client identified by Craigs as being of high risk under the provisions of the Anti-Money Laundering and Financing of Terrorism Act.

The authority says Craigs' didn't have a cohesive process for escalating, monitoring and managing AML/CFT issues and ensuring compliance with the AML/CFT compliance programme following the introduction of the AML/CFT Act on 30 June 2013. Craigs also failed to keep sufficient written records in relation to the due diligence process.

Since 2014, Craigs has taken steps to significantly improve its AML/CFT compliance programme and has also introduced a range of initiatives which will reduce the chances of similar breaches occurring in the future, says the authority.

Craigs also agreed to appoint an independent party to identify any further areas that may assist with the continued improvement of its AML/CFT compliance programme.