SFC reprimands and fines Zheshang International Financial Holdings Co., Limited $2.66 million for regulatory breaches

The Securities and Futures Commission (SFC) has reprimanded and fined Zheshang International Financial Holdings Co., Limited (Zheshang) $2.66 million for failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) and other regulatory requirements between June 2016 and October 2018 (Relevant Period).

The SFC’s investigation found that Zheshang failed to put in place an effective ongoing monitoring system to detect and assess suspicious trading patterns in client accounts, which resulted in its failure to detect the majority of the 23,370 self-matched trades that occurred in three client accounts during the Relevant Period.

In addition, the SFC identified that the amounts of deposits made into two client accounts were incommensurate with their declared financial profiles. Although Zheshang claimed to have made enquiries with the clients, it did not keep record of such enquiries.

The SFC is of the view that Zheshang’s systems and controls were inadequate and ineffective, and Zheshang failed to ensure compliance with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the AML Guideline and the Code of Conduct.

In deciding the disciplinary sanctions against Zheshang, the SFC has taken into account that:

• Zheshang’s failures to diligently monitor its clients’ activities and put in place adequate and effective AML/CFT systems and controls are serious as they could undermine public confidence in, and damage the integrity of, the market;
• a strong deterrent message needs to be sent to the market that such failures are not acceptable;
• Zheshang’s cooperation in resolving the SFC’s concerns, including its agreement to engage an independent reviewer to review its internal controls; and
• Zheshang has an otherwise clean disciplinary record.

中文版本

證監會譴責浙商國際金融控股有限公司違反監管規定並處以罰款266萬元

浙商國際金融控股有限公司（浙商）因在2016年6月至2018年10月期間沒有遵從打擊洗錢及恐怖分子資金籌集規定和其他監管規定，遭證券及期貨事務監察委員會（證監會）譴責及罰款266萬元。

證監會的調查發現，三個客戶帳戶於有關期間內進行了23,370項自我配對交易，但由於浙商沒有設立有效的持續監察系統，以偵測及評估客戶帳戶內的可疑交易模式，導致未能偵測出大部分該等交易。

此外，證監會識別到存入兩個客戶帳戶內的款項與其所聲明的財政狀況並不相稱。儘管浙商聲稱曾向有關客戶查詢，但卻沒有備存相關查詢紀錄。

證監會認為，浙商的系統及監控措施不足及成效不彰，且浙商沒有確保《打擊洗錢及恐怖分子資金籌集條例》、《打擊洗錢指引》和《操守準則》獲得遵從。

證監會在決定對浙商採取上述紀律處分時，已考慮到：

• 浙商沒有勤勉盡責地監察其客戶活動，以及沒有設立充足而有效的打擊洗錢及恐怖分子資金籌集制度和監控措施。此乃屬嚴重缺失，因為這可能會損害公眾對市場的信心和破壞市場的廉潔穩健；
• 有需要向市場傳遞具阻嚇力的強烈訊息，以示有關缺失不可接受；
• 浙商在解決證監會提出的關注事項時表現合作，包括同意委聘獨立檢討機構，以檢討其內部監控措施；及
• 浙商過往並無遭受紀律處分的紀錄。