The CSRC urges licensed institutions to remain vigilant against suspicious fund transfers

The Securities and Futures Commission (SFC) issued a circular urging licensed corporations and virtual asset trading platforms to remain vigilant against suspicious fund transfers that show signs of layering trading activities, to prevent money laundering, and reiterated the strict standards expected for detecting and preventing layering trading activities.

The SFC stated that there is a continuing upward trend of criminals using licensed institutions for layering trading activities, with some individuals attempting to disguise the sources and destinations of illegal funds to launder proceeds from deception and fraud cases. Common warning signs of layering trading activities involve a series of suspicious behaviors, including frequent, rapid, and organized deposits of funds into client accounts, followed by immediate withdrawals in the form of funds or virtual assets.

The SFC indicated that it has strengthened cooperation with the Hong Kong Police Force (including the Anti-Deception Coordination Centre and the Joint Financial Intelligence Unit) and industry stakeholders, demonstrating a firm commitment to public-private collaboration. Since September this year, some licensed institutions have agreed to cooperate with the Anti-Deception Coordination Centre's current "24/7 Payment Halt Mechanism" to expedite the interception of criminal proceeds and the recovery of related funds. In the past two months, about one-third of the criminal proceeds confirmed to be involved in deception and fraud that flowed into licensed institutions were successfully intercepted.

In his opening remarks at a seminar, the Executive Director of the SFC's Intermediaries Division, Yip Chi-hang, emphasized that licensed institutions (especially their senior management) must safeguard the integrity of their operations and the Hong Kong financial system. Maintaining a high level of vigilance is key to detecting layering trading activities. Licensed institutions should enhance their awareness of warning signs of suspicious transactions and regularly assess the robustness and effectiveness of their internal monitoring measures.

The SFC emphasized that it will continue to monitor licensed institutions' compliance with relevant anti-money laundering and counter-terrorist financing regulations and will take decisive regulatory or enforcement actions against licensed institutions that fail to fulfill their legal and regulatory responsibilities