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Hong Kong Regulator Reprimands, Fines Zhongtai International Securities

By Jiang Bowen and Dong Tongjian

(Hong Kong) — Hong Kong securities regulators have fined Zhongtai International Securities Ltd. HK$2.6 million ($335,000) for failing to comply with anti-money-laundering regulations when handing third-party fund deposits.

Zhongtai International is the second Chinese-mainland-funded securities firm to be fined in Hong Kong this year.

From January 2013 to December 2014, Zhongtai International failed to carry out sufficient scrutiny of third-party deposits made to its clients’ accounts at International Bank of China (Asia) Ltd. (ICBC), said the Hong Kong Securities and Futures Commission (SFC) in a statement on Tuesday. The regulators reprimanded the securities firm for failing to detect and report suspicious third-party fund deposits in a timely manner.

The SFC found that Zhongtai International processed more than 300 third-party deposits via the ICBC accounts in the period, and these deposits were made without the origins of the funds and identities of the third parties being verified.

In Hong Kong, legislation dealing with money laundering and terrorist financing includes the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO), which came into effect in April 2012, and imposes requirements on financial institutions regarding customer due diligence and record-keeping.

Zhongtai International is a Hong Kong-based subsidiary of Zhongtai Securities Co. Ltd., based in Jinan, Shandong province, and formerly known as Qilu Securities.

On March 6, the SFC fined Sinolink Securities (Hong Kong) HK$3 million for noncompliance with anti-money-laundering regulatory requirements.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)

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