ASIC letter pushes KVB Kunlun to identify and disengage Chinese clients
The problem is that the online forex margin trading platform of KVB’s Australian and New Zealand subsidiaries is targeted towards, among others, ethnic Chinese clients.
Hong Kong-focused retail Forex broker KVB Kunlun Financial Group Ltd (HKG:6877) has just posted a pretty startling announcement concerning its PRC domestic clients.
As a holder of the Australian Financial Services License, the Group received a letter from Australian Securities and Investments Commission (ASIC) dated April 18, 2019 addressed to its licensees. The Letter reminded licensees that they were obliged to comply with applicable laws of foreign jurisdictions, and recommended that licensees should seek legal advice to ensure that the products and services they offer to their clients comply with applicable foreign laws.
Certain subsidiaries of KVB Kunlun hold Australian and New Zealand financial services licenses, and as at the date of this announcement, the online forex margin trading platform of the Group’s Australian and New Zealand subsidiaries is targeted towards, among others, ethnic Chinese. Thus there are clients with Chinese names (the company refers to them as “Existing Ethnic Chinese Clients”).
Given ASIC’s Letter, the board of directors of KVB Kunlun has sought legal advice from its lawyer as to the laws of the People’s Republic of China. In line with the advice from the legal advisers on the PRC laws, a detailed survey of the Group’s Existing Ethnic Chinese Clients will be conducted. This survey aims to identify anyone who is, or who may possible be, classified as a PRC domestic client. Any person identified as an actual or potential PRC domestic client will then be disengaged as soon as possible.
The Board believes the commencement of the Identification and Disengagement of PRC Domestic Clients will ensure the Group’s legal compliance and is in the interests of the Company and its shareholders as a whole. However, there may be negative effects on the results of KVB.