SFC Bans Former Guosen Head of Dealing for 12 months

Source: Regulation Asia Editors, Regulation Asia 2020-06-24

The head of dealing “turned a blind eye” to internal control deficiencies in relation to third party deposits brought to her attention by its staff since 2013.

Hong Kong’s SFC (Securities and Futures Commission) has issued a 12-month ban against Guosen Securities’ Hong Kong head of dealing for AML failures when handling third party fund deposits.

According to the SFC, Guosen’s internal control deficiencies in relation to third party deposits were brought to the attention of its senior management by its staff in 2013.

Ms Joanna Chu Lai Wa, a responsible officer and a member of Guosen’s senior management at the time, did not take any steps to ensure that the deficiencies were rectified, which contributed to the company’s failure to put in place adequate AML/CFT internal controls between November 2014 and December 2015.

In February 2019, the SFC reprimanded and fined Guosen HKD 15.2 million, citing its processing of 10,000 third party deposits for more than 3,500 clients, totalling approximately HKD 5 billion.

Chu had received records of third party deposits from Guosen’s then head of settlement from time to time, showing that the company had processed a significant number of third party deposits for its clients. Chu did not take any action nor escalate the matter to her supervisor or other members of Guosen’s senior management.

“Apart from turning a blind eye to the money laundering and terrorist financing (ML/TF) risks associated with third party deposits, Chu also 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 said.

A copy of the Statement of Disciplinary Action is available here.

Chu had applied to the Securities and Futures Appeals Tribunal (SFAT) for a review of the SFC’s decision in January. A substantive hearing is scheduled to be held in December.

香港证监会

Guosen Securities

SFC Bans Former Guosen Head of Dealing for 12 months

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