The Securities and Futures Commission (SFC) has reprimanded and fined Zheng Da International Financial Holding Limited (Zheng Da) $7 million for failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) and other regulatory requirements between 1 December 2021 and 30 September 2023 (Relevant Period) (Note 1).
The SFC has also suspended the licence of Zheng Da’s responsible officer, Mr Zhong Hao, for seven months from 28 September 2026 to 27 April 2027 (Note 2).
The SFC’s investigation found that Zheng Da did not conduct any due diligence or testing on the customer supplied systems (CSSs) used by 160 clients for placing orders on futures trades during the Relevant Period. As a result, Zheng Da was unable to properly assess and manage the money laundering and terrorist financing (ML/TF) and other risks associated with the use of CSSs by its clients. Also, in the absence of proper control in place over the use of CSSs by its clients, Zheng Da exposed itself to the risks of improper conduct such as unlicensed activities, money laundering, nominee account arrangement, and unauthorized access to client accounts (Notes 3 and 4).
Moreover, the amounts and frequency of deposits made into eight client accounts were incommensurate with clients’ financial profiles declared in their account opening documents. Although Zheng Da claimed that Zhong would make enquiries with selected clients to understand their latest financial situations and the reasons behind their deposits and transactions, there were no records whatsoever in support of the firm’s enquiries with these clients. Consequently, Zheng Da failed to demonstrate that it had conducted proper enquiries on the deposits of the eight client accounts and satisfactorily addressed the associated ML/TF risks.
The SFC further found that Zheng Da failed to put in place an effective ongoing monitoring system to detect and assess suspicious trading patterns in client accounts. There were frequent and large number of trades in the eight client accounts during the Relevant Period, including Zheng Da’s failure to detect 176 instances in which buy and sell orders for the same futures contracts were placed by the same client within the same second and at the same price (Note 5).
The SFC is of the view that Zheng Da’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 6 and 7).
The SFC considers that Zheng Da’s failures were attributable to Zhong’s failure to discharge his duties as a responsible officer and a member of Zheng Da’s senior management.
In deciding the disciplinary sanctions against Zheng Da and Zhong, the SFC has taken into account that:
- Zheng Da’s failures to diligently monitor its clients’ activities and put in place adequate and effective AML/CFT systems and controls could undermine public confidence in the financial market and its integrity;
- Zheng Da continued to allow its clients to place orders through CSSs without conducting any due diligence on them, even after the SFC had taken multiple enforcement actions against licensed corporations for similar violations during the same period, with repeated reminders that such failures are unacceptable. Zheng Da has only stopped accepting new CSS applications from clients and disabled all existing CSSs since August 2025 (Note 8);
- Zheng Da and Zhong cooperated with the SFC in resolving the SFC’s concerns; and
- Zheng Da and Zhong have otherwise clean disciplinary records.
Notes:
- Zheng Da is licensed under the Securities and Futures Ordinance (SFO) to carry on Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts) regulated activities.
- Zhong has been accredited to Zheng Da and approved to act as its responsible officer for Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts) regulated activities since 15 January 2020. Zhong has been Zheng Da’s Manager-In-Charge of (i) Overall Management Oversight since 5 March 2020, (ii) Anti-Money Laundering and Counter-Terrorist Financing, Compliance, and Information Technology since 31 July 2020, (iii) Finance and Accounting since 15 May 2023, and (iv) Operational Control and Review and Risk Management since 7 October 2024.
- 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 Zheng Da’s broker supplied system (BSS) 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) identifies the entry of matching buy and sell orders in particular securities or futures contracts as an example of indicator that might give rise to suspicion of ML/TF, as it might create the illusion of active 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.
- Please refer to the SFC’s press releases dated 30 December 2021 (regarding Grand International Futures Co., Limited), 20 January 2022 (regarding Zhonghui International Futures Company Limited), 14 February 2022 (regarding South China Commodities Limited), 25 July 2022 (regarding Rifa Futures Limited), 7 February 2023 (regarding Jinrui Futures (Hong Kong) Limited), 9 March 2023 (regarding City International Futures (Hong Kong) Limited), 22 November 2023 (regarding Lion Futures Limited), 9 October 2024 (regarding CSC Futures (HK) Limited), 9 October 2024 (regarding Xinhu International Futures (Hong Kong) Co., Limited), and 3 July 2025 (regarding Freeman Commodities Limited).
A copy of the Statement of Disciplinary Action is available on the SFC website
