The Securities and Futures Commission (SFC) has prohibited Mr Su Xiqiang, former head of retail brokerage and responsible officer (RO) of Guosen Securities (HK) Brokerage Company, Limited (Guosen), from re-entering the industry for 10 months from 17 April 2019 to 16 February 2020 (Note 1).
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 (Note 2).
The SFC found that Guosen’s breaches were attributable to Su’s failure to discharge his duties as an RO and a member of Guosen’s senior management (Note 3).
In particular, Su, who was the most senior person overseeing Guosen’s retail brokerage business during the relevant time, failed to ensure that Guosen had:
- put in place effective policies to scrutinise and approve third party deposits received by retail clients;
- implemented adequate systems and controls to identify and monitor third party deposits made into its bank sub-accounts;
- communicated and enforced its internal AML/CFT policies effectively; and
- put in place proper procedures for reporting suspicious transactions.
Su also failed to supervise staff members diligently to ensure they adhered to Guosen’s AML/CFT policies by:
- documenting the assessment of retail clients’ level of risk on money laundering and terrorist financing at account opening; and
- regularly reviewing and updating existing records of retail clients.
In deciding the disciplinary sanction, the SFC took into account all relevant circumstances, including Su’s cooperation with the SFC in resolving its concerns and accepting the disciplinary action, as well as Su’s otherwise clean disciplinary record.
Notes:
- Su was licensed under the Securities and Futures Ordinance to carry on business in Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities) and Type 5 (advising on futures contracts) regulated activities. Su was accredited to Guosen as an RO between 4 November 2014 and 1 February 2019 in respect of Guosen’s Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities. Su is currently not licensed by the SFC.
- Guosen was reprimanded and fined $15.2 million by the SFC. Please refer to the SFC’s press release dated 18 February 2019.
- General Principle 9 of the Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct) requires senior management of a licensed corporation to bear primary responsibility for ensuring the maintenance of appropriate standards of conduct and adherence to proper procedures by the firm. Paragraph 14.1 of the Code of Conduct further provides that senior management of a licensed corporation should properly manage the risks associated with the firm’s business.
- Licensed corporations are reminded to refer to the “Circular to Licensed Corporations and Associated Entities – Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) Compliance with AML/CFT Requirements” issued by the SFC on 26 January 2017 which sets out key areas of concern identified by the SFC in its review of certain licensed corporations’ AML/CFT systems.
A copy of the Statement of Disciplinary Action is available on the SFC’s website
