Hong Kong’s Securities and Futures Commission (SFC) has reprimanded and fined CSC Futures (HK) Limited (CSC) $4.95 million for failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) and other regulatory requirements between January 2017 and December 2018.
The SFC’s investigation found that CSC did not conduct any due diligence on the customer supplied systems (CSSs) used by 100 clients for placing orders during the material time. As a result, CSC was not in a position to properly assess and manage the money laundering and terrorist financing (ML/TF) and other risks associated with the use of such CSSs by its clients.
In addition, the SFC identified that the amounts of deposits made into five client accounts were incommensurate with their declared financial profiles. As a result of its failure to maintain an effective monitoring system, CSC failed to detect, assess and conduct proper enquiries on the deposits and satisfactorily address the associated ML/TF risks.
The SFC is of the view that CSC’s systems and controls were inadequate and ineffective, and CSC failed to ensure compliance with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the AML Guideline and the Code of Conduct.
In deciding the disciplinary sanctions against CSC, the SFC has taken into account a variety of factors, including that CSC’s failures to diligently monitor its clients’ activities and put in place adequate and effective AML/CFT systems and controls are serious as they could undermine public confidence in, and damage the integrity of, the market.
The company, which has an otherwise clean disciplinary record, cooperated with the SFC in resolving the regulatory concerns.
