SFC Fines Guotai Junan Securities With $3.25 Million

Hong Kong's SFC has fined Guotai Junan Securities HK$25.2 million ($3.25 million) over multiple internal control deficiencies regarding AML/CFT.

22 June, 2020 | AtoZ Markets – Guotai Junan Securities is a major securities firm and investment bank in China. It provides services such as corporate finance, bond securities, asset management, and risk management. It serves customers throughout China.

SFC Fines Guotai Junan for Breaches Regulatory Requirements

Securities and Futures Commission (SFC) has fined Guotai Junan Securities HK$25.2 million (US$3.25 million). The fine is for multiple internal control failures and regulatory violations relating to these requirements. The company also failed to detect and report potential cleaning trades, which are a form of market manipulation, among other regulatory violations that occurred between 2014 and 2016. The SFC said:

"Between March 2014 and March 2015, Guotai Junan failed to take reasonable measures to ensure that proper safeguards 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, totalling approximately $37.5 billion.

Besides, Guotai Junan processed 5,406 third party deposits from July 2015 to June 2016 without always documenting the identity of the depositors, their relationship with the account holders, and the reasons for these third party deposits, contrary to the firm's written policies and procedures."

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Guotai Junan did not correctly and effectively implement AML/CFT policies and procedures regarding third-party fund transfers. Mr Thomas Atkinson, SFC's Executive Director of Enforcement, said, "the disciplinary action against Guotai Junan for serious systemic deficiencies and failures across its internal controls should serve as a stark reminder to licensed corporations the importance of having adequate and effective safeguards in place to mitigate the real risk of becoming a conduit to facilitate illicit activities, such as money laundering when exposed to potentially suspicious transactions".

However, Guotai Junan said, it would submit a report prepared by an independent auditor within 12 months. It also confirmed that all the pointed concerns would be corrected in the report.

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