Hong Kong SFC Issues 6-Month Ban on ex-CSC Futures Managing Director Kao Cheng Yung for Conducting No Due Diligence on Clients Leading to Failures in Money Laundering & Assessing Client Deposits, Approved as Responsible Officer from 2017 to 2021, Hong Kong SFC Fined CSC Futures $637,000 for Money Laundering Failure in 2017 & 2018, Failed to Conduct Due Diligence on Customer Supplied Systems Used by 100 Clients
22nd April 2025 | Hong Kong
The Hong Kong Securities and Futures Commission (SFC) has issued a 6-month ban on ex-CSC Futures Managing Director Kao Cheng Yung for conducting no due diligence on clients, leading to failures in money laundering & assessing client deposits. Kao Cheng Yung was approved as Responsible Officer from 2017 to 2021. In 2024 October, Hong Kong SFC fined CSC Futures $637,000 (HKD 4.95 million) for money laundering failure in 2017 & 2018, failing to conduct due diligence on customer supplied systems used by 100 clients. Hong Kong SFC (22/4/25): “The Securities and Futures Commission (SFC) has prohibited Mr Kao Cheng Yung, a former responsible officer (RO), manager-in-charge of overall management oversight and key business line and managing director of CSC Futures (HK) Limited (CSC), from re-entering the industry for six months from 19 April 2025 to 18 October 2025 (Note 1). The disciplinary action follows the SFC’s sanctions against CSC for its failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) and other regulatory requirements between January 2017 and December 2018 (Note 2). The SFC considers that CSC’s failures were attributable to Kao’s failure to discharge his duties as an RO and a member of the senior management of CSC during the material time. The SFC’s investigation found that CSC, without conducting any due diligence, was not in a position to properly assess and manage the money laundering and terrorist financing and other risks associated with permitting its clients to use customer supplied systems (CSSs) in placing orders. The SFC also found that CSC failed to detect, assess and conduct proper enquiries on client deposits which were incommensurate with the clients’ declared financial profiles (Notes 3 and 4).” More info below:
“ Hong Kong SFC Issues 6-Month Ban on ex-CSC Futures Managing Director Kao Cheng Yung for Conducting No Due Diligence on Clients Leading to Failures in Money Laundering & Assessing Client Deposits, Approved as Responsible Officer from 2017 to 2021, Hong Kong SFC Fined CSC Futures $637,000 for Money Laundering Failure in 2017 & 2018, Failed to Conduct Due Diligence on Customer Supplied Systems Used by 100 Clients “
In deciding the disciplinary sanction against Kao, the SFC has taken into account that:
- the failures of him and CSC to diligently monitor clients’ activities and put in place adequate and effective AML/CFT systems and controls are serious as they could undermine public confidence in, and damage the integrity of, the market;
- a strong deterrent message to be sent to the market that such failures are not acceptable; and
- he has an otherwise clean disciplinary record.
Notes:
- Kao was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 5 (advising on futures contracts) and Type 9 (asset management) regulated activities. Kao was accredited to CSC and approved to act as its RO from 8 September 2017 to 18 July 2021. Kao is currently not licensed by the SFC.
- CSC was reprimanded and fined $4.95 million for its failures in complying with AML/CFT and other regulatory requirements. Please see the SFC’s press release dated 9 October 2024.
- CSSs are trading software developed and/or designated by the clients that enable them to conduct electronic trading through the internet, mobile phones and other electronic channels.
- The CSSs were connected to CSC’s broker supplied system (BSS) through application programming interface (a set of functions that allows applications to access data and interact with external software components or operating systems). BSSs are trading facilities developed by exchange participants or vendors that enable the exchange participants to provide electronic trading services to investors through the internet, mobile phones and other electronic channels.
Hong Kong SFC Fines CSC Futures $637,000 for Money Laundering Failure in 2017 & 2018, Failed to Conduct Due Diligence on Customer Supplied Systems Used by 100 Clients
12th October 2024 – The Hong Kong Securities and Futures Commission (SFC) has fined CSC Futures $637,000 (HKD 4.95 million) for money laundering failure in 2017 & 2018, failing to conduct due diligence on customer supplied systems used by 100 clients. Hong Kong SFC (9/10/24): “The Securities and Futures Commission (SFC) has reprimanded and fined CSC Futures (HK) Limited (CSC) $4.95 million for failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) and other regulatory requirements between January 2017 and December 2018. The SFC’s investigation found that CSC did not conduct any due diligence on the customer supplied systems (CSSs) used by 100 clients for placing orders during the material time. As a result, CSC was not in a position to properly assess and manage the money laundering and terrorist financing (ML/TF) and other risks associated with the use of such CSSs by its clients. In addition, the SFC identified that the amounts of deposits made into five client accounts were incommensurate with their declared financial profiles. As a result of its failure to maintain an effective monitoring system, CSC failed to detect, assess and conduct proper enquiries on the deposits and satisfactorily address the associated ML/TF risks. The SFC is of the view that CSC’s systems and controls were inadequate and ineffective, and CSC failed to ensure compliance with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the AML Guideline and the Code of Conduct. In deciding the disciplinary sanctions against CSC, the SFC has taken into account that: 1) CSC’s failures to diligently monitor its clients’ activities and put in place adequate and effective AML/CFT systems and controls are serious as they could undermine public confidence in, and damage the integrity of, the market; 2) a strong deterrent message needs to be sent to the market that such failures are not acceptable; 3) there has been a change in CSC’s senior management after the relevant period; 4) CSC cooperated with the SFC in resolving the SFC’s concerns; and 5) CSC’s otherwise clean disciplinary record.”
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