繁

SFC reprimands and fines Emperor Securities Limited and Emperor Futures Limited $5.4 million for breaches of anti-money laundering regulatory requirements

Issue date: 2022-03-16 16:30:00

The Securities and Futures Commission (SFC) has reprimanded and fined Emperor Securities Limited (ESL) and Emperor Futures Limited (EFL) (collectively, Emperor) $5.4 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) regulatory requirements (Notes 1 & 2).

Specifically, the SFC found that Emperor failed to implement adequate and effective policies and procedures to mitigate the risks of money laundering and terrorist financing associated with third party deposits and payments.

The SFC’s investigation revealed that between 1 December 2016 and 10 December 2017, ESL and EFL routinely processed 732 and 32 third party fund transfers, totalling around $1.05 billion and $17.6 million respectively, without properly scrutinising whether these transfers were reasonable.  In particular:

• although Emperor’s policy required clients to provide justifiable reasons for third party fund transfers, some of their transfers were nevertheless approved even when there were no accompanying explanations;
• in cases where reasons for the transfers were provided, Emperor staff relied on information provided by the clients without making enquiries or requiring them to provide supporting documents for verification; and
• while clients needed to explain their relationship with the third parties, Emperor’s policy did not require them to provide documents to support their explanations.

As such, despite the presence of red flags in some of the third party fund transfers requested by clients, Emperor did not identify the suspicious transfers and make appropriate enquiries.

The SFC is of the view that Emperor’s conduct was in breach of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the Guideline on Anti-Money Laundering and Counter-Terrorist Financing and the Code of Conduct (Notes 3 & 4).

In deciding the disciplinary sanctions against Emperor, the SFC took into account that:

• Emperor adopted a lax attitude when handling third party fund transfers of their clients;
• a strong deterrent message needs to be sent to the market that AML/CFT failures are not acceptable;
• Emperor have taken remedial actions to enhance their internal controls and systems in relation to the handling of third party fund transfers;
• Emperor cooperated with the SFC in resolving the SFC’s concerns; and
• Emperor have no disciplinary record with the SFC in relation to AML/CFT failures.

End

Notes:

1. ESL is licensed under the Securities and Futures Ordinance (SFO) to carry on Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities.
2. EFL is licensed under the SFO to carry on Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts) regulated activities.
3. Please refer to paragraphs 3 to 7 of the Statement of Disciplinary Action for the relevant regulatory requirements.
4. Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

News captured as of:2022-03-16 16:35:00

Source: SFC