HONG KONG, June 22 (Reuters) - Hong Kong’s market watchdog fined a unit of Chinese securities broker Guotai Junan Securities HK$25.2 million ($3.25 million) for “multiple internal control failures” concerning anti-money laundering and other areas.
Guotai Junan Securities (Hong Kong) had failed to detect numerous potentially suspicious transactions or report them appropriately, the Securities and Futures Commission (SFC) said in a statement of disciplinary action published on Monday.
These included transactions with no apparent commercial purpose to third parties sometimes only described as ‘a friend’ of the broker’s client in the documents.
The broker also failed to detect and report potential wash trades, a form of market manipulation, among other regulatory breaches, all of which took place between 2014 and 2016.
The disciplinary action “should serve as a stark reminder to licensed corporations the importance of having adequate and effective safeguards in place to mitigate the real risk of becoming a conduit to facilitate illicit activities,” said Thomas Atkinson, the SFC’s executive director of enforcement.
A spokesman for Guotai Junan Securities said that the fine concerned matters from four and five years ago, and that the issues had since been rectified. ($1 = 7.7500 Hong Kong dollars) (Reporting by Alun John, editing by Louise Heavens)