The Securities and Futures Commission has reprimanded and fined Guotai Junan Securities (Hong Kong) HK$25.2 million for multiple internal control failures and regulatory breaches over anti-money laundering, handling of third-party fund transfers and placing activities, as well as detection of wash trades and late reporting. The SFC investigation found that between March 2014 and March 2015 Guotai Junan failed to ensure that proper safeguards were put in place to mitigate the risks of money laundering and terrorist financing in processing 15,584 third-party deposits or withdrawals for its clients, totaling about HK$37.5 billion. For placing activities, between December 2015 and January 2016, Guotai Junan failed to ascertain whether the clients' subscription applications were consistent with its knowledge of their background and source of funds and make appropriate inquiries when there were grounds for suspicion. As for the detection of wash trades and reporting obligations, Guotai Junan failed to detect 590 potential wash trades between January 2014 and July 2016 due to a lack of adequate written trade monitoring procedures or guidelines and technical failures of its transaction pattern monitoring system. However, as a result of the system failure, Guotai Junan did not report these 210 trades to the SFC until seven months later in February 2017.

Source: The Standard June 22, 2020 19:07 UTC