SFC reprimands and fines Zheng Da International Financial Holding Limited $7 million and suspends its responsible officer for regulatory breaches

Disciplinary Sanctions Imposed by the Securities and Futures Commission

On September 29, 2026, the Securities and Futures Commission (the "SFC") issued a statement of disciplinary action against Zheng Da International Financial Holding Limited ("Zheng Da"), imposing a reprimand and a monetary penalty of HK$7 million for breaches of anti-money laundering and counter-financing of terrorism ("AML/CFT") obligations and other regulatory requirements during the period from 1 December 2021 to 30 September 2023. In addition, the SFC suspended the licence of Mr Zhong Hao, Zheng Da's responsible officer, for a period of seven months commencing on 28 September 2026 and expiring on 27 April 2027.

Findings Relating to Customer Supplied Systems

The SFC determined that throughout the Relevant Period, Zheng Da failed to conduct any form of due diligence or testing with respect to customer supplied systems (""CSSs"") utilised by 160 clients for placing orders in futures trades. This absence of oversight rendered Zheng Da unable to properly identify and manage money laundering, terrorist financing, and other risks attendant upon such CSS usage. Consequently, the firm was exposed to material risks including unlicensed activities, potential nominee account arrangements, unauthorized access to client accounts, and facilitation of illicit financial flows.

Deficiencies in Client Monitoring and Transaction Enquiries

The SFC further found that deposits made into eight client accounts were inconsistent with the clients' declared financial profiles as recorded at account opening. Although Zheng Da asserted that Mr Zhong had conducted enquiries with selected clients regarding their updated financial circumstances and the rationale behind specific transactions, no documentary evidence of such enquiries existed on file. As a result, Zheng Da could not demonstrate that it had performed adequate due diligence on these eight accounts or satisfactorily mitigated the associated AML/CFT risks.

Absence of Effective Ongoing Surveillance Mechanisms

The SFC identified that Zheng Da failed to implement an effective ongoing monitoring system capable of detecting and assessing suspicious trading patterns across client accounts. During the Relevant Period, these eight accounts exhibited frequent and high-volume transactions, including no fewer than 176 instances in which buy and sell orders for identical futures contracts were placed by the same client within a single second at the same price level—conduct that constitutes a recognised indicator of potential market manipulation or money laundering.

Regulatory Non-Compliance and Attribution to Responsible Officer

The SFC concluded that Zheng Da's systems, controls, and compliance framework were both inadequate and ineffective in ensuring adherence to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the Guideline on AML/CFT (the "AML Guideline"), and the Code of Conduct for Persons Licensed by or Registered with the SFC. The Commission attributed these systemic failures directly to Mr Zhong's dereliction of his duties as responsible officer and member of Zheng Da's senior management.

Factors Weighed in Determining Sanctions

In calibrating the disciplinary sanctions, the SFC took into account both aggravating and mitigating circumstances. On the one hand, the Commission noted that (i) Zheng Da's persistent failure to diligently monitor client activities and maintain adequate AML/CFT controls posed a risk of undermining public confidence in market integrity; and (ii) despite multiple prior enforcement actions by the SFC against other licensed corporations for analogous CSS-related violations during the same period—accompanied by repeated warnings that such conduct was unacceptable—Zheng Da continued to permit client order placement through untested CSSs, only ceasing new CSS applications and disabling all existing ones in August 2025. On the mitigating side, the SFC acknowledged (iii) Zheng Da's and Mr Zhong's cooperation with the Commission in addressing its concerns; and (iv) their otherwise clean disciplinary records.

Licensing Scope and Role of the Responsible Officer

Zheng Da held a licence under the Securities and Futures Ordinance to carry on Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts) regulated activities. Mr Zhong had been accredited to Zheng Da as its responsible officer for both categories since 15 January 2020, and served successively as Manager-In-Charge of: Overall Management Oversight (from 5 March 2020); AML/CFT, Compliance, and Information Technology (from 31 July 2020); Finance and Accounting (from 15 May 2023); and Operational Control & Review and Risk Management (from 7 October 2024).

Technical Definitions: Customer Supplied Systems and Broker Supplied Systems

For the purposes of this action, CSSs refer to trading software developed or designated by clients that enables electronic order placement via internet, mobile devices, and other digital channels. Such systems were interfaced with Zheng Da's broker supplied system (""BSS"") through an application programming interface facilitating data access and interaction between applications and external components. BSS denotes the electronic trading infrastructure developed by exchange participants or their vendors to provide clients with online trading services.

Applicable Regulatory Frameworks and Prior Enforcement Context

The AML Guideline expressly identifies matching buy and sell orders in particular securities or futures contracts as an indicator potentially giving rise to suspicion of money laundering or terrorist financing, on the basis that such activity may create a false appearance of market liquidity and signal manipulative intent. The Code of Conduct for Persons Licensed by or Registered with the SFC applied in this matter, and the specific regulatory requirements are set out in the Statement of Disciplinary Action. Readers are directed to prior SFC press releases dated 30 December 2021 (Grand International Futures Co., Limited), 20 January 2022 (Zhonghui International Futures Company Limited), 14 February 2022 (South China Commodities Limited), 25 July 2022 (Rifa Futures Limited), 7 February 2023 (Jinrui Futures (Hong Kong) Limited), 9 March 2023 (City International Futures (Hong Kong) Limited), 22 November 2023 (Lion Futures Limited), 9 October 2024 (CSC Futures (HK) Limited and Xinhu International Futures (Hong Kong) Co., Limited), and 3 July 2025 (Freeman Commodities Limited).