Other Author Sara Troughton, Professional Support Lawyer (Litigation)
The Securities and Futures Commission (SFC) has reprimanded and fined Jinrui Futures (Hong Kong) Limited (Jinrui) HK$4.8 million for breaching anti-money laundering (AML) regulations. Two of its responsible officers have separately been suspended and banned from the industry. Please see the SFC’s statement here.
By way of background, the SFC had received a complaint against multiple licensed corporations (LCs) which alleged that a broker supplied system used by the LCs, known as ‘Xinguanjia’, permitted the creation of sub-accounts under client accounts with the LCs. In more detail, the SFC concluded that:
- For two years, Jinrui failed to conduct due diligence on a customer supplied trading software connected to their broker supplied system that allowed its clients to place orders electronically. This meant that Jinrui could not properly assess or manage the money laundering risks arising from its clients’ orders.
- When opening client accounts, Jinrui failed to comply with its own manual, only screening its clients retrospectively – in the worst case 34 months after account opening.
- Jinrui also failed to perform ongoing due diligence, allowing suspicious deposits to be made into client accounts that were inconsistent with the client’s declared net worth.
- Jinrui’s failures were partially attributable to failures of its responsible officers and members of the senior management of Jinrui.
Since 2019, the SFC has announced 20 disciplinary actions relating to AML breaches, with fines ranging from HK$3.6 million to HK$25.2 million (and separately a landmark fine of HK$2.7 billion against a global financial institution for its involvement in 1MDB’s bond offerings). While the fine in this case is relatively small, it is a timely reminder that AML non-compliance is a core focus of the SFC and remains one of the most frequent disciplinary outcomes.