SFC Imposed a HK$9 Fine on RIFA Future for KYC Failings

Richard Marley
July 27, 2022
2 minutes read
165

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.

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Talent Acquisition Fraud - Hiring Legitimate Candidates with Identity Verification
Along with the rise in virtual and remote work, the number of cases of recruitment fraud is increasing at an unprecedented pace, urging authorities to take decisive action against criminals. Especially the pandemic resulted in huge mass layoffs giving setbacks to many sectors, ultimately creating massive inflation across the globe.

Now that the pandemic’s effects are diminishing, 97 million new job roles are to be expected by the next year, which will expedite fraudulent practices in the talent acquisition sector. Companies should be on their guard and implement a joint action plan to counter rising recruitment scams to secure their onboarding process.

How do Online Recruiting Scams Work?

The scammers fraudulently use an established company’s name, logo and even the details of real employees working in human resource departments to post jobs on recruiting websites or other social media platforms.

Keeping their credentials almost identical to the official company’s details, they send emails to job-seekers or post fake jobs. As soon as interested candidates apply, they conduct interviews to get sensitive information about candidates through telephonic or on-site interviews.

Through fake interviews and telephonic/email conversations, criminals ask for sensitive personal information, particularly social security, ID number and bank account details that job seekers often provide, paving the way for identity fraud.

In some cases, the scammers even seek money from the candidates in the name of background checks or certifications which directly cost them financial losses. In the US alone, users lost $86 million due to fake job opportunities posted on the internet.

Spotting the Signs of Recruitment Fraud

Recruitment fraud is the most unfortunate part of modern job hunting, where criminals prey upon candidates’ eagerness to find work for their living by creating scam job opportunities.

Here are a few signs that can help job seekers spot fraudulent elements during the recruitment process:

Legitimate hiring managers and employers never ask applicants to make any financial transaction in their personal or company account. Always say No to any person who is asking you to send money for any recruitment purpose.

Although the majority of companies ask the candidates to provide their personal information, this step usually comes when the recruitment process is near to complete. Any person asking for sensitive information like bank account details, social security number, date of birth or identity details could be a scammer who must be turned down.

The majority of companies recruit their employees using their official email accounts; rather than contacting the person through common numbers or email addresses. Any job letter/offer from any such account could be a fake one.

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Law enforcement authorities in the US have arrested a criminal for his involvement in a pandemic-related employment fraud. The Police have also stated that the criminal has a whole gang behind him, and they are trying to bring them under the law as well.

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Due to the rising cases of recruitment scams across the globe resulting in financial losses of millions of dollars, law enforcement authorities of various jurisdictions are taking stringent action against criminals.

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2. UK Government – Raising Awareness of Employment Scams

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How Shufti Pro can Help

With transforming technologies, the overall market is growing to produce more job opportunities for interested candidates. As per the surveys, this number is expected to grow in the coming years, increasing recruitment fraud risks.

Through talent acquisition scams, criminals not only defraud job seekers but also damage the reputation of established companies. So it is in their higher interest to find and implement a credible solution that efficiently mitigates the risks of stolen identity or credentials.

Shufti Pro’s identity verification services present an ideal option to counter this problem through its advanced identification features, including document authentication, facial recognition and address verification.

Want to learn more about identity verification services for eliminating recruitment fraud?

Connect with a KYC Expert

SFC Imposed a HK$9 Fine on RIFA Future for KYC Failings

How Much Have Australians Lost to Scams?

How do Online Recruiting Scams Work?

Spotting the Signs of Recruitment Fraud

High Profile Criminal Cases of Recruitment Fraud

1. Europol Arrested a Gang Involved in €20 Million Employment Fraud

2. Hampton Gang Member Convicted for Pandemic Employment Fraud

Talent Acquisition Fraud and the Role of Law Enforcement Authorities

1. FBI Issued Instructions to Avoid Employment Scam

2. UK Government – Raising Awareness of Employment Scams

How Shufti Pro can Help

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