$8 million: Hong Kong SFC fines Grand International Futures for AML failures
Although Grand International Futures and Liang cooperated with the SFC and have otherwise clean disciplinary records with the regulator, the financial watchdog felt a strong deterrent message needed to be sent to the market.
The Hong Kong SFC has fined Grand International Futures Co., Limited $8 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) and other regulatory requirements between October 2017 and October 2018.
Besides the fine and reprimand, the financial watchdog also suspended Liang Benyou, the executive directly responsible for the regulatory breaches.
Liang Benyou suspended for eight months
The SFC license of Liang Benyou was suspended for eight months from 28 December 2021 to 27 August 2022 for having failed, along with Grand International Futures, to conduct due diligence on the trading platform used by 103 clients for placing orders.
As the result of the firm’s compliance failures, the investment company was not in a position to properly assess and manage the money laundering and terrorist financing (ML/TF) and other risks associated with the use of the trading platform.
Proof of that is that the SFC identified that the amounts of deposits made into four client accounts were incommensurate with their declared financial profiles.
Grand International Futures, however, claimed that it was aware of these anomalies, but it failed to demonstrate that it had conducted proper enquiries on the deposits and satisfactorily addressed the associated ML/TF risks.
In addition, the firm failed to put in place an effective ongoing monitoring system to detect suspicious trading patterns in client accounts resulted in its failure to detect 100,989 self-matched trades in nine client accounts.
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Strong deterrent message despite cooperation and clear records
The firm’s systems and controls were inadequate and ineffective, according to Hong Kong’s SFC, which states it failed to ensure compliance with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (AML Guideline) and the Code of Conduct.
Since the failures are allegedly attributable to Liang’s failure to discharge his duties as a responsible officer and a member of GIFCL’s senior management, the SFC took disciplinary sanctions against GIFCL and Liang.
The SFC further pointed out the AML failures were serious as they could undermine public confidence in, and damage the integrity of, the market.
Although Grand International Futures and Liang cooperated with the SFC and have otherwise clean disciplinary records with the regulator, the financial watchdog felt a strong deterrent message needed to be sent to the market.
The firm is licensed under the Securities and Futures Ordinance to carry on Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts) regulated activities.
