Hong Kong’s SFC bans ex-director of Guosen Securities (HK) Brokerage Company

Maria Nikolova

Joanna Chu Lai Wa, former responsible officer, director and head of dealing of Guosen is prohibited from re-entering the industry for 12 months.

Hong Kong’s Securities and Futures Commission (SFC) today announces that it has prohibited Ms Joanna Chu Lai Wa, former responsible officer, director and head of dealing of Guosen Securities (HK) Brokerage Company, Limited from re-entering the industry for 12 months. The ban will last from 23 June 2020 to 22 June 2021.

The disciplinary action follows the SFC’s sanctions against Guosen over its failures to comply with anti-money laundering (AML) and counter financing of terrorism (CFT) regulatory requirements when handling third party fund deposits between November 2014 and December 2015.

The regulator found that Guosen’s breaches were attributable to Chu’s failure to discharge her duties as a responsible officer and a member of Guosen’s senior management.

Specifically, Guosen’s internal control deficiencies in relation to third party deposits were brought to the attention of its senior management – including Chu – by its staff in 2013. However, Chu deemed that the matter was irrelevant to her and did not take any steps to ensure that the deficiencies were rectified. Her inaction contributed to Guosen’s failure to put in place adequate AML/CFT internal controls during the material time.

Chu also received records of third party deposits from Guosen’s then head of settlement from time to time. Those records showed that, contrary to Guosen’s purported policy to discourage third party deposits, it processed a significant number of third party deposits for its clients. But Chu did not take any action and did not escalate the matter to her supervisor or other members of Guosen’s senior management, despite the substantial amount of third party deposits received.

On top of turning a blind eye to the money laundering and terrorist financing (ML/TF) risks associated with third party deposits, Chu failed to ensure that Guosen’s staff adhered to the procedures for assessing clients’ ML/TF risks by documenting the process as required by Guosen’s compliance manual in her capacity as one of the approvers of account opening applications.

The SFC considers that Chu’s conduct did not respond to the standard required of her as a responsible officer for a licensed corporation.

In determining the disciplinary sanction, the SFC took into account all relevant circumstances, including that Guosen’s regulatory breaches were serious and Chu’s otherwise clean disciplinary record.

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