Securities and Futures Commission Enhances Measures to Counter Fake Documents and Money Laundering Risks and Raises Account Opening Standards

BlockBeats News, May 22nd. Today, the Securities and Futures Commission (SFC) of Hong Kong issued a circular outlining the monitoring measures to be implemented when opening accounts and maintaining customer relationships. The circular was issued following a review by the Commission of the account opening practices of 12 securities brokers. The review identified several significant deficiencies, including inadequate due diligence on account opening documents, acceptance of suspicious or forged documents during the account opening process, and weaknesses in managing cross-border agency relationships with overseas intermediaries. The SFC expressed deep concerns that customer accounts could be improperly used for suspicious or unlawful transactions, thereby exacerbating money laundering and terrorist financing risks.

The SFC has instructed all licensed corporations to conduct internal reviews as soon as practicable to detect whether any suspicious or forged documents have been accepted for opening accounts. The SFC has also outlined additional measures for licensed corporations in opening and managing accounts for Mainland investors. These additional measures include closing investment accounts opened with suspicious or forged documents, closing zero-balance inactive investment accounts, and requiring written declarations from investors when opening new investment accounts, as well as mandating that settlement and fund deposits must only be made through a bank account held in the client's own name at a licensed bank.