The Securities and Futures Commission (SFC) has reprimanded iSTAR International Futures Co. Limited, now known as Rifa Futures Limited, and fined it $3 million over failures to comply with anti-money laundering regulatory requirements when processing third party fund transfers.
An SFC investigation found that between January and July 2014, Rifa took insufficient steps to mitigate the risk of money laundering when handling third party deposits and transfers by failing to:
- obtain proper written instructions from clients and verify the identity of third parties before effecting third party deposits on numerous occasions;
- make sufficient enquiries concerning third party deposits and maintain proper records of the findings;
- ensure that the approval process in respect of third party deposits was effective;
provide adequate anti-money laundering training to its staff; and
- put in place an appropriate and effective compliance function.
The SFC considers that Rifa’s conduct was in breach of its obligation to take all reasonable measures to ensure that proper safeguards exist to guard against the risks of money laundering and terrorist financing associated with third party fund transfers, including making appropriate enquiries to ensure third party fund transfers are consistent with the customers’ known legitimate activities, maintaining records of such enquiries, and effective implementation of internal policies for the prevention of money laundering and terrorist financing and communication of such policies to staff members.
The SFC further found that Rifa breached the Securities and Futures (Client Money) Rules on one occasion by effecting a payment from a client’s account to the account of one of its responsible officers.
In deciding the disciplinary sanction, the SFC took into account that Rifa:
- has since taken action to remediate its internal control deficiencies;
- cooperated with the SFC in resolving the disciplinary proceedings;
- agreed to engage an independent reviewer to conduct a review of its internal controls; and
- has an otherwise clean disciplinary record.
The complete announcement can be seen here.