The Securities and Futures Commission (SFC) has reprimanded and fined Freeman Commodities Limited (Freeman), now known as Arta Global Futures Limited (Arta), $3.4 million for failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) and other regulatory requirements between June 2017 and December 2018 (Note 1).
The SFC has also suspended Mr Li Chun Kei, a former responsible officer (RO), managing director and manager-in-charge of key business line of Freeman, for four months from 20 June 2025 to 19 October 2025 considering Freeman’s failures were partly attributable to his failures in discharging his duties (Notes 2 and 3).
The SFC’s investigation found that Freeman did not conduct any due diligence on the customer supplied systems (CSSs) used by 89 clients for placing orders during the material time. As a result, Freeman was not in a position to properly assess and manage the money laundering and terrorist financing (ML/TF) and other risks associated with the use of such CSSs by its clients (Notes 4 and 5).
In addition, the deposits made into six client accounts were incommensurate with their declared financial profiles. As a result of its failure to maintain an effective monitoring system, Freeman failed to detect, assess and conduct proper enquiries on the deposits and satisfactorily address the associated ML/TF risks.
The SFC further found that Freeman failed to put in place an effective ongoing monitoring system to detect suspicious trading patterns in client accounts, as there were frequent and large number of trades in the six client accounts and in many instances buy and sell orders for the same futures contracts were placed by the same client in the same second at the same price (Note 6).
The SFC is of the view that Freeman’s systems and controls were inadequate and ineffective, and it failed to ensure compliance with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the AML Guideline and the Code of Conduct (Notes 7 and 8).
In deciding the disciplinary sanctions against Freeman and Li, the SFC has taken into account that:
- the gravity of the failures of Freeman and Li to diligently monitor clients’ activities and put in place adequate and effective AML/CFT systems and controls could undermine public confidence in, and damage the integrity of, the market;
- the importance of a strong deterrent message to the market that such failures are not acceptable;
- Freeman and Li have otherwise clean disciplinary records; and
- Arta’s financial position and its cessation of business (Note 9).
Notes:
- Freeman is licensed under the Securities and Futures Ordinance (SFO) to carry on Type 2 (dealing in futures contracts) regulated activity. It changed its name to Arta in October 2021.
- Li was licensed under the SFO 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. Li was accredited to Freeman and approved to act as its RO from 18 October 2016 to 6 September 2021. Li is currently not accredited to any licensed corporation.
- The SFC has also suspended Mr Pun Hong Hai, a former RO, chief executive officer and manager-in-charge of overall management oversight of Freeman, for 10 months. Please see the SFC’s press release dated 19 June 2025.
- 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.
- The CSSs were connected to Freeman’s broker supplied systems (BSSs) through an 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.
- The Guideline on Anti-Money Laundering and Counter-Terrorist Financing (AML Guideline) specifies the entry of matching buys and sells in particular securities and futures as an example of situations that might give rise to suspicion of money laundering, as it might create the illusion of trading and be an indication of market manipulation.
- Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
- Please refer to the Statement of Disciplinary Action for the relevant regulatory requirements.
- If not for these factors, the SFC would have imposed a $9 million fine against it.
A copy of the Statement of Disciplinary Action is available on the SFC website
