SFC AML Concerns: Forex Brokers are urged to update control


SFC AML concerns are raised, as the Enforcement Division of Hong Kong’s Securities and Futures Commission executes an investigation around a number of licensees' anti-money laundering internal control systems. What is the next step?

22 September, AtoZForex – The Enforcement Division of Hong Kong’s Securities and Futures Commission (SFC) has announced the fact of investigation around a number of cases of SFC-licensed brokerages with supposedly inappropriate anti-money laundering (AML) internal control systems.

SFC AML Concerns

Following on this, the Hong Kong watchdog is expecting to bring a number of enforcement actions as an outcome of the investigation. The SFC intends to draw the attention of licensees that they are anticipated to advance their AML internal control systems as soon as possible.

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SFC states that the firms have already had sufficient amount of time to improve their internal controls since the launch of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and the SFC Guideline on Anti- Money Laundering and Counter-Terrorist Financing in 2012.

Which issues have been identified?

In the process of its onsite investigations of licensees and other AML investigations, the Hong Kong regulator has identified the following issues, which have been published on the official website of SFC:

-failure to scrutinize cash and third party deposits into customer accounts

-ineffective monitoring of transactions in customer accounts

-failure to take adequate measures to continuously monitor business relationships with customers which present a higher risk of money laundering

-inadequate inquiries made to assess potentially suspicious transactions to determine whether or not it is necessary to make a report to the Joint Financial Intelligence Unit, and lack of documentation of the assessment results

-failure to monitor and supervise the ongoing implementation of anti-money laundering and counter-terrorism financing policies and procedures

Since licensed companies are exposed to being used to launder the proceeds of crime and to finance terrorism, the regulator requires them to execute the effective AML means in order to prevent and identify these illegal activities. Additionally, the Hong Kong watchdog expects the licensees to take their AML responsibilities seriously.

The main Hong Kong regulator carried out this unusual practice to publicly point out its concerns regarding the inappropriate internal controls by particular licensees in the certain administrative region.

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