Enforcement collaboration between HKMA and SFC - SFC reprimands and fines EFG Bank AG HK$10.85 million for regulatory breaches and internal control failures

The Securities and Futures Commission ("SFC") has levied a fine of HK$10.85 million on EFG Bank AG ("EFG") for breaches of product due diligence, record-keeping, and late reporting from January 2015 to December 2020.

EFG's failures stemmed from its inability to properly account for special product features during due diligence, delay in updating internal policies, and inadequate record-keeping for 141 bonds.

EFG was also criticized for delaying the reporting of its product due diligence failures to the SFC. The SFC took into account EFG's remedial actions and cooperation in imposing the sanctions.

EFG is required to implement Enhanced Complaint Handling Procedures ("ECHP") to review relevant transactions and complaints, particularly those involving customers who acquired 351 potentially affected products during the specified period.

EFG is registered to engage in Type 1 (dealing in securities), Type 4 (advising on securities), and Type 9 (asset management) activities under the Securities and Futures Ordinance.

The Hong Kong Monetary Authority ("HKMA") referred EFG's violations to the SFC following an investigation into its self-reported product due diligence failures.

EFG's violations contravened the SFC's Code of Conduct and Management, Supervision, and Internal Control Guidelines.

EFG's compliance with the ECHP will be monitored to ensure it adheres to regulatory requirements and addresses customer complaints effectively.