Hong Kong-based brokerage firm Rifa Futures Limited was fined a collective HK$9 million for multiple regulatory breaches spanning three years by the domestic regulatory authority, the Securities and Futures Commission.
The fines were the result of several control failures, including those related to know-your-client, anti-money laundering and counter-terrorist financing (AML/CFT), as well as other regulatory requirements. Rifa has previously been disciplined by the SFC for similar AML-related failures, the regulator notes.
Some of the violations stretch back to May 2016, with one reprimand over a failure to properly update the company’s compliance and procedural manual to capture the regulatory requirements that came into effect in April 2018.
For Rifa and its account executives, the regulatory actions focused on a series of internal control failures in its operations. The lapse in oversight also extended to the failure to segregate the sales, compliance, and settlement functions effectively.
The regulator further explains that Rifa policies didn’t prohibit staff from receiving client order instructions without conducting adequate due diligence. The SFC’s investigation found that Rifa permitted 310 clients to use the company’s platform for placing orders while it was not in a position to properly assess and manage the money laundering and terrorist financing and other risks associated with its clients.
In addition, Rifa had failed to implement two-factor authentication (2FA) for clients to login to their trading accounts via CSSs since the regulatory requirement took effect four years ago.
For its part, Rifa reached a quick resolution, taking immediate remedial actions to reconcile these lapses. This was instrumental in averting a higher fine for the firm. The fact that the broker cooperated in resolving the SFC’s concerns also helped its cause.
The SFC serves as the region’s paramount regulator, and it routinely shores up forms of market abuse, regulatory lapses and other compliance issues. Furthermore, Hong Kong regulators have been stepping up their compliance actions to enforce anti- money laundering rules.