Client Identity Rule breach: SFC fined Guotai Junan $1.3 mln


30 May AtoZForex, Vilnius - Recently Hong Kong’s Securities and Futures Commission (SFC) was investigating issues related to Client Identity Policy. The regulator was taking harsh measures and imposing fines on entities, who failed to conform with the Policy. According to the latest announcement, the SFC fined Guotai Junan Securities Ltd (Hong-Kong) the sum equal to $1.3 million based on non-compliance.

The Client Identity Rule states that a licensed entity has to refuse the business of those who are not ready to provide their client identity details to the regulators upon request. Moreover, the SFC might take a disciplinary action against the licensed person in case he/she was put on notice that intermediary failed to comply with its agreement to the transaction.

The reasons behind SFC's disciplinary measures

The SFC requested identity information from Guotai Junan in July 2014. The information was related to clients, who acted as intermediary clients in Korea. The company failed to provide necessary information in accordance with the Client Identity Rule policy. As a result, SFC fined Guotai Junan Securities.

Hong Kong SFC and Guotai Junan were informed in August 2014 that the intermediary client is not able to send the requested client identity data without the written consent of its client. As a consequence, Guotai Junan did not present the information to the SFC until January 2015.

Guotai Junan neglected SFC's reminder

However, the company continued to perform more than 8,000 transactions for that intermediary client. This happened on August 2014 and January 2015. Despite, the SFC issued a reminder about the Client Identity Rule: Guotai Junan had to refuse the business of those, who are not ready to provide client identity information to the regulators.

The Commission is no longer satisfied with the fact that Guotai Junan did not comply with Client Identity Rule and could not provide necessary ultimate client information. Based on these breaches, the SFC fined Guotai Junan Securities.

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