HK SFC Hits BMI and Key Executive for AML Failures

Published On February 26, 2020

The Hong Kong Securities and Futures Commission (SFC) has reprimanded and fined BMI Securities Limited (BMISL) $3.7m for failures in complying with anti-money laundering (AML) and counter-terrorist financing (CFT) regulatory requirements. The SFC has also suspended BMISL’s responsible officer, Ms Maggie Tang Wing Chi, for five and a half months from 11 February 2020 to 25 July 2020.

In 2016, a number of BMISL’s clients subscribed for placing shares in two Hong Kong-listed companies and subsequently transferred most or all of these shares to third parties using bought and sold notes in a series of off-exchange transactions.

The off-exchange transactions, whose consideration ranged from $4.4m to $855.9m, displayed various suspicious features including:

  • the subscription amount for the placing shares was incommensurate with the clients’ financial profile; and
  • the clients did not conduct any other transactions in their BMISL accounts apart from acquiring and disposing of the placing shares.

The SFC found that, during the period from 1 May 2016 to 30 November 2017, BMISL failed to:

  • implement adequate internal controls to mitigate the risk of money laundering and terrorist financing associated with suspicious transactions conducted through bought and sold notes;
  • identify, and conduct proper enquiries and sufficient scrutiny on, suspicious transactions and consider reporting them to the Joint Financial Intelligence Unit where appropriate;
  • perform appropriate customer due diligence and keep customer information up-to-date and relevant; and
  • put in place adequate and effective procedures for the identification of politically exposed persons and the screening of terrorist and sanction designations.

The SFC further found that BMISL’s breaches were attributable to Tang’s failure to discharge her duties as a responsible officer and a member of BMISL’s senior management.  In particular, Tang failed to identify and conduct appropriate enquiries on the suspicious transactions and to ensure that BMISL had established and implemented adequate and effective AML/CFT systems to mitigate the risks of money laundering and terrorist financing.