On May 22, the Securities and Futures Commission (SFC) issued a circular detailing the results of a special review concerning account-opening procedures at 12 licensed securities brokerage firms. Multiple serious shortcomings were identified: inadequate due diligence on account-opening documents, acceptance of suspicious or forged documents submitted by clients during the onboarding process, and failure to effectively monitor cross-border agency relationships with overseas intermediaries. The review also revealed that certain accounts showed suspicious fund transfers despite having no trading history, raising concerns that they might be used for illegal transactions and money laundering. Dr. Ashley Alder, Executive Director of the Intermediaries Division, stated that the SFC maintains a zero-tolerance policy toward forged documents in account openings, and vowed to take resolute regulatory and enforcement actions against non-compliant firms and their senior management personnel.
It was further found that most accounts involving suspicious or forged documents belonged to mainland Chinese investors. In response, the SFC introduced additional measures: licensed firms must close any accounts opened using such documents, as well as inactive accounts with zero balances; for newly opened accounts belonging to mainland investors, written declarations must be obtained, and settlements or withdrawals may only be conducted through eligible bank accounts registered under the clients’ own names. All licensed firms have been instructed to conduct internal self-assessments promptly. The circular explicitly references a joint initiative launched on the same day by eight authorities including China’s CSRC aimed at curbing cross-border illegal securities activities; it clarifies that violations of regulatory rules in jurisdictions outside Hong Kong also constitute breaches of the SFC’s Code of Conduct, thereby triggering regulatory or legal consequences. Additionally, individuals using forged documents could potentially be charged under Sections 73 or 74 of Hong Kong’s Crimes Ordinance.