Hong Kong regulator investigating brokers for AML shortfalls


Hong Kong’s Securities and Futures Commission’s (SFC) Enforcement Division announced they are investigating a number of cases of SFC licensed brokerages with suspected inadequate anti-money laundering (AML) internal controls and it expects to bring a number of enforcement proceedings as a result.

The SFC wants to draw the attention of licensees that they are expected to enhance their AML internal controls immediately as they have had ample time to develop their internal controls since the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and the SFC Guideline on Anti-Money Laundering and Counter-Terrorist Financing came into force in 2012.

During its onsite inspections of licensees and AML investigations, the SFC identified the following areas of concern:

  • failure to scrutinise cash and third party deposits into customer accounts
  • ineffective monitoring of transactions in customer accounts
  • failure to take adequate measures to continuously monitor business relationships with customers which present a higher risk of money laundering
  • inadequate enquiries made to assess potentially suspicious transactions to determine whether or not it is necessary to make a report to the Joint Financial Intelligence Unit, and lack of documentation of the assessment results
  • failure to monitor and supervise the ongoing implementation of anti-money laundering and counter-terrorist financing policies and procedures

Since licensees are vulnerable to being used to launder the proceeds of crime and to finance terrorism, the SFC relies on them to implement effective AML measures to prevent and detect these criminal activities and expects them to take their AML responsibilities seriously.

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Hong Kong regulator investigating brokers for AML shortfalls

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