Navigating the Revised BRMQ

In December 2022, the Securities and Futures Commission (SFC) introduced a revised Business and Risk Management Questionnaire (BRMQ) that has significant implications for licensed corporations (LCs) and associate entities (AEs) with a financial year ending on or after 30 November 2023. This update should not be taken lightly, as the new questionnaire spans a whopping 171 pages and aims to enhance the volume and specificity of data that the SFC receives on an annual basis.

To provide clarity on the revised BRMQ and help navigate the changes, ComplianceAsia organized a breakfast briefing at the China Club in Hong Kong on 16 May 2023. ?Chaired by our Founder and CEO, Philippa Allen, the session featured insights from our expert panel, including Justin Fletcher (Head of AML services, North Asia), Cherry Chan (Compliance Director), Fraser Leishman (Compliance Manager), and Monique Chan (Compliance Manager). Together, they highlighted the key takeaways from the revised questionnaire.

The updated BRMQ introduces five primary non-AML changes that merit attention:

?1.??Operational risk:

Every business, regardless of its future prospects, must have a well-structured and comprehensive exit plan in place for regulated activities. This proactive approach ensures that all necessary precautions are taken, rather than preparing for failure.

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2.????Information technology:

LCs offering internet trading services must disclose information on their implementation of monitoring and surveillance mechanisms to detect suspicious activities.

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3.??Brokerage businesses:

LCs are required to provide details on their brokerage businesses, including their top three execution brokers and the exchanges they trade on. Additionally, the SFC seeks information on risk management measures for trading on public holidays.

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4.??Distribution of investment products and/or provision of investment advisory services:

LCs must specify whether they offer services to retail or private investors. Furthermore, they need to detail the types of investment products offered, including any complex products, and outline their approach to managing client risk levels.

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5.??Discretionary management services for funds and/or discretionary accounts:

This section has a diverse collection of questions about the investors in unauthorized funds discretionary accounts with and without external clients, and fund investments in China.

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The AML section of the questionnaire, which previously consisted of 15 questions and three multi-part questions, has now expanded to a staggering 35 questions with 24 multi-part questions!

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We understand that navigating the complexities of the revised BRMQ can be challenging. As a trusted compliance partner, ComplianceAsia brings over 20 years of experience in providing comprehensive compliance and regulatory advisory services to financial institutions. Our dedicated team of specialists is well-equipped to assist you with the revised BRMQ and ensure your organization's compliance.

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To discuss how we can support your organization and help you stay compliant, please reach out to your assigned consultant. Alternatively, please email us at [email protected] ?