The company was found guilty of breaching anti-money laundering regulations.
Yardley Securities Limited was fined $5m by the Securities and Futures Commission (SFC) for failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) regulatory requirements when handling third party fund transfers.
Investigations revealed that YSL processed and approved suspicious third party fund transfers in two client accounts between February and May 2016 without conducting proper enquiries and sufficient scrutiny. It was also found out that YSL did not properly record enquiries it claimed to have made in relation to these transfers.
SFC said YSL approved the third party transfers without documenting the reasons at the relevant time, and the written evaluation forms for the transfers, which YSL prepared retrospectively to document the evaluation it claimed to have made, showed that YSL failed to make adequate enquiries. There was also no record of enquiries which YSL claimed to have made.
SFC also found that YSL had no written policies and procedures on AML/CFT until October 2016 and YSL’s staff were not aware of its AML/CFT policies and procedures, including those on suspicious transaction identification and the reporting of such transactions to the money laundering reporting officer (MLRO). The staff responsible for processing money deposits and withdrawals was not aware that YSL had an MLRO.
The company also did not provide adequate AML/CFT training to its staff to ensure that they follow its policies.
YSL’s conduct was in breach of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the Guideline on Anti-Money Laundering and Counter-Terrorist Financing, and the Code of Conduct.
In deciding the disciplinary sanction, the SFC took into account that YSL’s failures lasted for at least nine months and that it adopted a lax attitude when handling a substantial amount of third party transfers in its clients’ accounts.
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