Can your company meet the SFC’s standards for operating bank accounts?
The SFC issued a circular on 28 June 2021 on the operation of bank accounts. Licensed companies (LCs) are expected to critically review their existing policies, procedures and internal controls in connection with the operation of its bank accounts to ensure full compliance with the circular by 3 January 2022.
The SFC expects LCs to adopt a formal document, approved by the board of directors, setting out which ROs or MICs are nominated to be responsible for the daily management of the following four areas: (a) adequate safeguarding of client assets; (b) prompt discharge of settlement of margin obligations to clearing houses and trading counterparties; (c) ensuring the availability of sufficient financial resources needed for the proper performance of the LC’s business activities; and (d) full compliance with the financial resources requirements under the Financial Resources Rules at all times. The LC can nominate more than one RO or MIC for this task, and we suggest it is advisable to do so to cover for periods of leave.
The board will need to delegate sufficient authority to the designated ROs or MICs and empower them to (i) implement and execute policies, procedures and internal controls designed to prevent any act or omission which may adversely affect the LC’s compliance with regulatory obligations for each of the above four areas, including the operation of bank accounts; and (ii) ensure that all authorised signers are subject to proper oversight and accountability with respect to the operation of the LC’s bank accounts.
The SFC expects individuals from the following groups to be authorised signers for effecting any form of payment from an LC’s house bank accounts:
|ROs, MICs or his / her delegate(s) (the circular sets out the who can be a delegate); or
|any other person, provided that such person can only effect payment jointly with an RO, MIC or his / her delegate(s).
However, for effecting any form of payments from an LC’s client bank account, only an RO, MIC or his / her delegate(s) can be the authorised signers.
The circular also lists out different examples of unsatisfactory practices in the operation of bank accounts. Given the SFC has set a deadline for compliance, LCs should expect the SFC to look at this during a routine inspection.
We are already in the second half of 2021. It is time to remind all licensed individuals to start counting their 2021 CPT requirements.
As internal training can be counted as CPT, provided it meets the SFC’s requirements as set out in the Guidelines on Continuous Professional Training, firms should use CPT as the opportunity to make sure licensed individuals are aware of the firm’s internal policies on the SFC’s hot topic areas (e.g. AML/CDD requirements) and new regulatory requirements such as the new competency and CPT regime (see our article of 24 June 2021).
When counting how many CPT hours are required for 2021, licensed individuals also need to check if they have any unfulfilled 2020 CPT hours that have been carried forward for completion in 2021.