Intermediaries reminded full compliance with Know Your Client and account opening procedures

12 May 2015



The Securities and Futures Commission (SFC) today issued a Circular reminding intermediaries on the importance of appropriate account opening procedures for investors in and outside Hong Kong in order to fully comply with the Know Your Client (KYC) and account opening procedures requirements under the Code of Conduct (Notes 1 & 2). 

The Circular was issued after the SFC had identified certain deficiencies and an unsatisfactory practice by licensed corporations during recent supervisory reviews of KYC and account opening procedures.

As a result, the SFC urged intermediaries to take proper measures to effectively authenticate the client’s identity and the client’s execution of account opening documents. Intermediaries are reminded to ensure that the identity and other personal information about their clients are accurate and up-to-date to ensure their clients are contactable.

The Circular also highlights that the use of an affiliate which itself is not a regulated financial institution and is not subject to similar KYC requirements to perform the task of certifying the identity documents of new clients and client’s execution of account opening documents may result in inadequacies due to the lack of relevant knowledge and experience of the affiliate. As such, intermediaries are strongly discouraged from appointing any affiliate which is not a regulated financial institution to perform such task. 

Intermediaries are reminded that any failure to maintain and implement proper policies and procedures for compliance with the KYC and account opening requirements may be subject to disciplinary actions by the SFC.   

The Circular is available on the SFC website.

End

Notes:

  1. The Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct).
  2. The Know Your Client requirements are set out in paragraph 5.1 of the Code of Conduct. Intermediaries are required to take all reasonable steps to establish the true and full identity of each of their clients, and of each client’s financial situation, investment experience, and investment objectives.


Page last updated : 12 May 2015