The party involved City International Futures (Hong Kong) Limited (CIFHKL), now known as VERCAP Financial Services Limited.
Between March 2016 and October 2018, CIFHKL did not comply with anti-money laundering and counter-terrorist financing (AML/CFT) requirements as well as other regulatory requirements.
It was found that
- CIFHKL did not perform the necessary due diligence on the customer supplied systems (CSSs) used by 16 of their clients for placing orders. This failure on their part led to an inability to assess and manage the associated money laundering and terrorist financing (ML/TF) risks with the use of these CSSs by their clients.
- It found that two client accounts had deposits that were not proportional to their declared financial profiles, yet CIFHKL did not conduct adequate investigations into these deposits to address the associated ML/TF risks.
- CIFHKL lacked an effective monitoring system to detect suspicious trading patterns in client accounts, particularly in the two client accounts that had frequent and large numbers of trades, and where buy and sell orders for the same futures contracts were placed by the same client in the same second at the same price.
Therefore, after an investigation by SFC, SFC fined CIFHKL HK$100,000.