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RIFA Limited was charged by the domestic regulatory authority of Hong Kong, the Securities and Futures Commission, over violations of KYC standards
The Hong Kong-based brokerage firm RIFA Limited was charged by the SFC (Securities and Futures Commission) for a collective amount of HK$9 million for multiple regulatory breaches spanning three years.
The fines were imposed because of various control failings which also included the KYC (Know Your Client), AML (Anti Money Laundering), and CFT (Counter-terrorist Financing) violations. RIFA has also been fined previously for the AML failings by the SFC as per the regulator. Some of the penalties were from May 2016 with one reprimand over a failure of the compliance and manuals of the company. It was necessary to fulfil the regulatory requirements that later came into effect in April 2018.
The regulatory actions were targeted at a number of internal control failures of RIFA and its account executives and their operations. The fall in oversight also made failures to impact sales by dividing them alongside other controls of compliance, and settlement functions.
The regulator goes on to say that RIFA procedures didn’t prevent employees from accepting clients’ order instructions without performing sufficient due diligence. According to the SFC’s investigation, RIFA allowed 310 clients to use its platform for making orders even though it was unable to adequately assess and control the risks of money laundering, terrorism financing, and other issues posed by its customers.
Moreover, the brokerage firm also failed to implement Two-Factor Authentication (2FA) for its clients to sign into their trading profiles through CSSs since the regulatory requirement took effect four years ago.
RIFA reached a quick resolution, to recover from its shortcomings it took immediate remedial actions which were instrumental in turning away a higher fine for the organisation. The fact that the broker cooperated in resolving SFC’s concerns also assisted RIFA’s cause.
The SFC acts as the primary regulator for the area and regularly addresses market misuse, regulatory shortcomings, and other compliance issues. In order to implement AML laws, Hong Kong regulators have also increased their efforts to make regulatory standards more strict than before.
Suggested Read: SFC Finalizes Consultation Conclusions on AML Guidelines