03/15/2021 | Press release | Archived content
15 Mar 2021
The Securities and Futures Commission (SFC) has reprimanded and fined Sino-Rich Securities & Futures Limited (Sino-Rich) $7.2 million for failures in complying with anti-money laundering and counter-terrorist financing regulatory requirements when handling cash deposits and third party fund transfers (Note 1).
The SFC's investigation found that between April 2015 and October 2017 (Relevant Period), Sino-Rich had routinely processed:
For cash deposits, there is no record of any enquires made by Sino-Rich's staff with the clients and approvals by its responsible officers (ROs) prior to January 2017. It was only after the SFC issued a management letter to Sino-Rich in November 2016 that Sino-Rich required its staff to record the reasons and the ROs' approval for cash deposits.
With respect to third party transfers, Sino-Rich's staff were required to fill in the relevant third party transfer forms but important information such as the client's relationship with the third party, the reason for the transfer and/or the client's signature was not provided in around 40% of the forms. The SFC also found that there were numerous occasions where the relationships or reasons stated do not include sufficient particulars to explain why the relevant clients had to use their securities/futures accounts at Sino-Rich to receive or route funds from/to third parties.
There is no record that Sino-Rich had rejected any requests for cash deposits and third party transfers or made any reports to the Joint Financial Intelligence Unit (JFIU) during the Relevant Period. Nonetheless, the SFC found that a substantial number of cash deposits and third party transfers processed or approved by Sino-Rich raised a number of red flags that warranted further inquiries or report to the JFIU. For example:
The SFC is of the view that Sino-Rich'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 (April 2015 - February 2018 edition), the Code of Conduct and the Internal Control Guidelines (Notes 2 to 4).
In deciding the disciplinary sanctions against Sino-Rich, the SFC took into account that:
Page last updated 15 Mar 2021