Sino-Rich fined $7.2m for anti-money laundering breach

The SFC found $930m worth of questionable cash deposits and transfers made within two years.

The Sino-Rich Securities & Futures Limited (Sino-Rich) has been fined $7.2m for its failure to comply with the anti-money laundering and counter-terrorist financing requirements, the Securities and Futures Commission (SFC) said.

Upon investigation, the SFC found Sino-Rich routinely processed 238 cash deposits with aggregate amount of more than $30m and 269 third party transfers, amounting $900m. The transactions were made between April 2015 and October 2017.

The SFC observed there was no record of any enquires by Sino-Rich with the clients and approvals by its responsible officers for cash deposits before January 2017.

Sino-Rich only started to require its staff to record the reasons and approvals for cash deposits in November 2016 when the SFC issued a management letter.

Further, the SFC found that around 40% of the forms for third party transfers lacked important details, such as client’s relationship with the third party, reason for transfer, and client’s signature.

In some cases, the reasons or relationships stated in the forms were not sufficient to explain why the client had to use their securities/futures accounts.

“There is no record that Sino-Rich had rejected any requests for cash deposits and third party transfers or made any reports to the Joint Financial Intelligence Unit (JFIU) during the Relevant Period,” the SFC said.

The SFC also flagged other observations that warrant further inquiries or report to the JFIU, including 38 cash deposits worth $3m made to a client within eight days and 12 cash deposits worth $1m to a client within a day and was transferred to another broker on the same day.

The SFC noted that upon deciding the corresponding disciplinary action for Sino-Rich, it took into account its cooperation with the SFC to resolve the issue. Sino-Rich also agrees to be subjected to an independent reviewer.