Anti-money laundering and the counter-financing of terrorism (AML and CFT) recommendations continue to be encouraged by the Financial Action Task Force (FATF) on a global scale in an effort to restrict financial crime with regulators taking firm action against non-compliance with local AML and CFT regulations.
AML requirements and recommendations are integral to ensure that the risks that differ across multiple jurisdictions are suitably addressed by each country’s applicable regulator. The FATF’s list of 92 recommendations are internationally endorsed, global standards against money laundering which provide an effective framework for countries looking to combat money laundering and terrorist financing.
Recent examples of enforcement action
Hong Kong
In February 2023, The Securities and Futures Commission (SFC) in Hong Kong fined Jinrui Futures Limited HKD4.8 million for breaching the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. Further, in March 2023, the SFC reprimanded and fined City International Futures (Hong Kong) Limited (CIFHKL), now known as VERCAP Financial Services Limited, HKD100,000 for failing to comply with the Anti-Money Laundering and Counter-Terrorist Financing Regulations and the Code of Conduct for Persons Licensed by or Registered with the SFC for failure to conduct due diligence on the customer supplied systems used by its clients for electronic trading, which resulted in CIFHKL being unable to properly assess or manage the associated money laundering and terrorist financing risks. This in turn led to CIFHKL exposing itself to the risks of improper conduct such as unlicensed activities and unauthorised access to client accounts. CIFHKL had also failed to conduct proper enquiries on the source of unusual client deposits and establish an effective ongoing monitoring system to detect and assess suspicious trading patterns in client accounts.
Given the primary importance of compliance with AML and CFT regulation, these cases show the increase in enforcement by the SFC to reduce and deter financial crime. Since 2019, the SFC has announced more than 20 disciplinary actions due to AML breaches. Enforcement will help ensure that companies conduct due diligence and screen clients pre-emptively rather than retrospectively to better assess money laundering risks.
BVI
This example of enforcement is mirrored by the British Virgin Islands Financial Services Commission (FSC) which recently fined McNamara Corporate Services Limited USD20,000 for its contraventions of the Anti-Money Laundering Terrorist Financing Code of Practice, (Revised) (AMLTF Code of Practice), whereby they failed to carry out customer due diligence (CDD) and failed to have a professional verify the nature of their clients’ business and source of wealth, which contravened section 19 of the AMLTF Code of Practice. Similarly, they failed to meet the new obligations to ensure adequate staff training on AML compliance of Section 16 of the AMLTF Code of Practice. Enforcing this Code of Practice is vital to promote transparency in business transactions and to ensure funds are verified and received from credible sources.
directors and officers of the company are reminded to keep abreast of these obligations and ensure compliance, so that they are not held liable for any related breaches
Marbury’s team of AML specialists are able to review your entity from a licensing perspective or simply from a compliance and AML perspective to ensure that the relevant requirements applicable to the company are being sufficiently met and obligations adhered to. With the substantial increase in enforcement action over the past few months, directors and officers of the company are reminded to keep abreast of these obligations and ensure compliance, so that they are not held liable for any related breaches.
Marbury Regulatory Advisory Services
For more information on compliance and AML review services which include compliance calendaring to ensure respective deadlines are met over the course of the year, please contact your usual Marbury advisor or info@marburys.com.