The Securities and Futures Commission (SFC) of Hong Kong has reprimanded and fined Zheng Da International Financial Holding Limited $7 million for failures in complying with anti-money laundering and counter-financing of terrorism (AML/CFT) and other regulatory requirements between 1 December 2021 and 30 September 2023 (Relevant Period).

The regulator has also suspended the licence of Zheng Da’s responsible officer, Mr Zhong Hao, for seven months from 28 September 2026 to 27 April 2027.

The SFC’s investigation found that Zheng Da did not conduct any due diligence or testing on the customer supplied systems (CSSs) used by 160 clients for placing orders on futures trades during the Relevant Period. As a result, Zheng Da was unable to properly assess and manage the money laundering and terrorist financing (ML/TF) and other risks associated with the use of CSSs by its clients. Also, in the absence of proper control in place over the use of CSSs by its clients, Zheng Da exposed itself to the risks of improper conduct such as unlicensed activities, money laundering, nominee account arrangement, and unauthorized access to client accounts.

Moreover, the amounts and frequency of deposits made into eight client accounts were incommensurate with clients’ financial profiles declared in their account opening documents. Although Zheng Da claimed that Zhong would make enquiries with selected clients to understand their latest financial situations and the reasons behind their deposits and transactions, there were no records whatsoever in support of the firm’s enquiries with these clients.

Consequently, Zheng Da failed to demonstrate that it had conducted proper enquiries on the deposits of the eight client accounts and satisfactorily addressed the associated ML/TF risks.

The SFC further found that Zheng Da failed to put in place an effective ongoing monitoring system to detect and assess suspicious trading patterns in client accounts. There were frequent and large number of trades in the eight client accounts during the Relevant Period, including Zheng Da’s failure to detect 176 instances in which buy and sell orders for the same futures contracts were placed by the same client within the same second and at the same price.

The SFC is of the view that Zheng Da’s systems and controls were inadequate and ineffective, and it failed to ensure compliance with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the AML Guideline, and the Code of Conduct.

The regulator concluded that Zheng Da’s failures were attributable to Zhong’s failure to discharge his duties as a responsible officer and a member of Zheng Da’s senior management.

In deciding the disciplinary sanctions against Zheng Da and Zhong, the SFC has taken into account that:

• Zheng Da’s failures to diligently monitor its clients’ activities and put in place adequate and effective AML/CFT systems and controls could undermine public confidence in the financial market and its integrity;
• Zheng Da continued to allow its clients to place orders through CSSs without conducting any due diligence on them, even after the SFC had taken multiple enforcement actions against licensed corporations for similar violations during the same period, with repeated reminders that such failures are unacceptable. Zheng Da has only stopped accepting new CSS applications from clients and disabled all existing CSSs since August 2025;
• Zheng Da and Zhong cooperated with the SFC in resolving the SFC’s concerns; and
• Zheng Da and Zhong have otherwise clean disciplinary records.