Hong Kong Securities And Futures Commission Bans Kao Cheng Yung For Six Months

The Securities and Futures Commission (SFC) has prohibited Mr Kao Cheng Yung, a former responsible officer (RO), manager-in-charge of overall management oversight and key business line and managing director of CSC Futures (HK) Limited (CSC), from re-entering the industry for six months from 19 April 2025 to 18 October 2025 (Note 1).

The disciplinary action follows the SFC’s sanctions against CSC for its failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) and other regulatory requirements between January 2017 and December 2018 (Note 2).

The SFC considers that CSC’s failures were attributable to Kao’s failure to discharge his duties as an RO and a member of the senior management of CSC during the material time.

The SFC’s investigation found that CSC, without conducting any due diligence, was not in a position to properly assess and manage the money laundering and terrorist financing and other risks associated with permitting its clients to use customer supplied systems (CSSs) in placing orders. The SFC also found that CSC failed to detect, assess and conduct proper enquiries on client deposits which were incommensurate with the clients’ declared financial profiles (Notes 3 and 4).

In deciding the disciplinary sanction against Kao, the SFC has taken into account that:

• the failures of him and CSC to diligently monitor 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 to be sent to the market that such failures are not acceptable; and
• he has an otherwise clean disciplinary record.

Notes:

1. Kao was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 5 (advising on futures contracts) and Type 9 (asset management) regulated activities. Kao was accredited to CSC and approved to act as its RO from 8 September 2017 to 18 July 2021. Kao is currently not licensed by the SFC.
2. CSC was reprimanded and fined $4.95 million for its failures in complying with AML/CFT and other regulatory requirements. Please see the SFC’s press release dated 9 October 2024.
3. CSSs are trading software developed and/or designated by the clients that enable them to conduct electronic trading through the internet, mobile phones and other electronic channels.
4. The CSSs were connected to CSC’s broker supplied system (BSS) through application programming interface (a set of functions that allows applications to access data and interact with external software components or operating systems). BSSs are trading facilities developed by exchange participants or vendors that enable the exchange participants to provide electronic trading services to investors through the internet, mobile phones and other electronic channels.