Other Author Sara Troughton, Professional Support Lawyer (Litigation)
The Hong Kong Securities and Futures Commission (SFC) has reprimanded and fined City International Futures (Hong Kong) Limited (CIFHKL), now known as VERCAP Financial Services Limited, HK$100,000 for failing to comply with anti-money laundering and counter-terrorist financing regulations and the Code of Conduct for Persons Licensed by or Registered with the SFC. Please see the SFC’s statement here.
The SFC concluded that CIFHKL had failed to conduct due diligence on the customer supplied systems used by its clients for electronic trading, which resulted in CIFHKL being unable to properly assess or manage the associated money laundering and terrorist financing risks and had exposed itself to the risks of improper conduct such as unlicensed activities and unauthorised access to client accounts. CIFHKL had also failed to conduct proper enquiries on the source of unusual client deposits and establish an effective ongoing monitoring system to detect and assess suspicious trading patterns in client accounts.
In comparison with the HK$4.8 million fine against another futures firm last month for similar breaches (see our Alert), the fine in this case is relatively small. The SFC noted that CIFHKL’s failures were serious as they could undermine public confidence in, and damage the integrity of, the market. However, the SFC took into account CIFHKL’s financial position, the termination of its business (since March 2021) and CIFHKL’s request for the SFC to revoke its licence in imposing a lower fine. This case serves as a reminder that the SFC will continue to focus on AML non-compliance, no matter the size or complexity of the breach, and that financial institutions should be mindful of the significant reputational risk associated with AML related compliance failures.
6 月 05 日2023 年
6 月 05 日2023 年