Following our FNG Exclusive report from last month that Australia police had raided the offices of ASIC licensed Retail FX and CFDs broker Prospero Markets, as part of a wider action taken against a China based money laundering ring, Australia financial regulator ASIC has announced that it has now suspended the Australian Financial Services (AFS) license of the company.

Prospero Markets is an Australia based broker which services mainly Chinese speaking clients, both in Australia and across the Far East.

Prospero Markets Pty Ltd has also provided an undertaking to the regulator that it will not deal in client funds without ASIC’s agreement.

Prospero’s license suspension means it cannot provide financial services during the suspension period from 20 December 2023 until 28 February 2024.

Interestingly, in explaining its decision ASIC made no mention of the police raid, or the arrest at the time of Prospero’s controlling shareholder and Managing Director Ding (Dean) Wang. Instead, the regulator stated that following an administrative hearing, ASIC found that Prospero Markets failed to lodge its annual financial statement and audit report for the financial year ending 30 June 2023 within the prescribed timeframe and in compliance with its AFS license conditions.

ASIC added that if Prospero fails to lodge its annual financial statement and audit report for the financial year ending 30 June 2023 during the suspension period, ASIC will consider whether the license should be suspended for a further period or cancelled.

On 16 November 2023, ASIC also commenced an investigation of suspected contraventions of the Corporations Act 2001 by Prospero, in the period from 1 March 2021.

On 19 December 2023, Prospero Markets agreed to ASIC’s request that Prospero provide an undertaking to ASIC that it will not deal in client funds without ASIC’s permission. The undertaking will remain until at least 8 February 2024 to allow ASIC time to investigate its concerns. The regulator added that Prospero Markets is assisting ASIC with its investigation. Prospero may also apply to the Administrative Appeals Tribunal for a review of ASIC’s decision to suspend its AFS license.

Money laundering arrests

In our earlier article from the end of November, we had reported that Australian Federal Police (AFP) had arrested seven members of an alleged Chinese organised crime syndicate, accusing them of secretly running a prominent, multi-billion-dollar money remitting chain in Australia in what the AFP termed the “most complex AFP-led money laundering investigation” in the nation’s history.

The arrests surrounded a nationwide chain of currency exchange outlets called Changjiang Currency Exchange, which the AFP alleges is being secretly run by the Long River money laundering syndicate out of China. The syndicate and Changjiang Currency Exchange are accused of laundering $229 million in the proceeds of crime over the past three years.

Among those arrested was reportedly Ding (Dean) Wang, who is listed as the sole director of CJ Prime Financial, the ultimate holding company of Prospero Markets, and Prospero Markets’ presumed controlling shareholder. And it turns out that Prospero Markets’ offices were among those locations which were raided by the AFP in late October. Prospero Markets’ bank accounts were also frozen at the time.

While the AFP did not specifically mention Prospero Markets in its original press release announcing the arrests, or formally link the Changjiang Currency Exchange to Prospero Markets, Australia news site The Australian reported that a number of those arrested (aside from Ding Wang) also have links to Prospero Markets. The Australian also reported that a source informed it that it is “common knowledge” in the Chinese community in Australia that Changjiang Currency Exchange and Prospero Markets were run by the same people.

Following the AFP raid, we reported that Prospero Markets clients were sent an email by the company stating:

“We regret to inform you that Prospero Markets’ bank accounts including but not limited to its Client Money bank accounts have been frozen by the banks.

“We are in the process of contacting the relevant banks to have these accounts unfrozen.

“As a result, we have been unable to process your deposits and withdrawals, as well as other required dealings in these accounts, since October 25.

“We are working to rectify this as quickly as possible.’’

We will continue to follow this story as it develops.