Hong Kong's SFC issued a restriction notice on a forex broker over serious money laundering concerns.
The Securities and Futures Commission (SFC) placed a Restriction Notice on IDS Forex HK (IDS).
The order prohibits the firm from carrying on all activities for which it is licensed, disposing of or dealing with any assets held by it or held on behalf of its clients, and assisting, counselling or procuring another person to dispose of or deal with any such property without the SFC’s prior written consent.
Laundering The Proceeds of Crime
The SFC's action follows a self-report notification by IDS on 5 June 2017 informing the SFC that its sole shareholder, Kim Sunghun, a Korean passport holder, was convicted of illegal fund-raising and fraud in Korea and was sentenced to 12 years imprisonment on 3 February 2017.
The extensive fraudulent scheme involved Kim soliciting investors since 2011 to invest in business carried on by him outside Korea, which included margin forex business.
Shut Down
The SFC has reason to believe that the capital injections made by Kim into IDS may be wholly, or in part, proceeds of crime, and may be an attempt to launder the proceeds of crime, and that IDS conducted no business operations in the past three years as reasonably expected of a fit and proper licensed corporation.
In a press release on its website the SFC has serious doubts about IDS’s reputation and character as well as its fitness and properness to remain licensed and has commenced an investigation in light of the above information.
Hong Kong Task Force
As such, the SFC considers it necessary to prevent any further regulated activity by IDS, and any disposals or dealings in the relevant property of IDS, and in the public interest has imposed on IDS the prohibitions set out in the Restriction Notice.
In May this year the Hong Kong police, local authorities and major banks launched a Fraud and Money Laundering Intelligence Taskforce, a 12 month pilot project in a bid to enhance the detection, prevention and disruption of serious financial crime and money laundering threats.
