What are the 2024 compliance action items for licensed companies?
• 2024 business plan: Are there any anticipated changes to your business activities? If so, have you considered the following:
– whether such changes may impact your existing licenced status (including any conditions imposed on your licence);
– any potential impact to your MIC arrangements;
– your ability to comply with the SFC’s Financial Resources Rules, record keeping arrangements, and internal control policies and procedures;
– does the SFC need to be notified or any prior approval sought?
• Audit questionnaire: please be reminded that auditors of licensed corporations are required to complete and submit the updated version of Audit Questionnaire as at the end of the licensed corporation’s financial year in respect of any period ending on or after 1 December 2023. The revised version of the audit questionnaire is available on the SFC website: https://www.sfc.hk/en/Forms/Intermediaries/Audit-questionnaire
• BRMQ: have you considered the current version of the Business & risk management questionnaire that you will need to complete for this year?
• AML: have you reviewed your existing AML/CFT systems lately? We recommend you consider the latest AML/CFT self-assessment checklist posted by the SFC on 14 November 2023.
• CPT: have you planned your CPT calendar to ensure that your licensed individuals obtain their minimum hours well in advance of the December 2024 deadline?
• Be prepared to enhance your cybersecurity measures: As mentioned in our September 2023 newsletter, the SFC has commenced a cybersecurity review of selected licensed brokers, traders, global financial firms and online distribution platform operators, focusing on their compliance with the regulatory standards on cybersecurity management and operational resilience. The review covers cybersecurity management and incident reporting, cloud security controls and governance, vendor risk management and remote access controls, amongst others. The findings of the cybersecurity review will form the basis for further regulatory guidance in due course.
• Routine inspection: if you have not been subject to an SFC routine inspection within the last four to five years, you should start preparing in anticipation of your next routine inspection. We recommend a proactive rather than a reactive approach.
Deadline reminder
The deadline for the submission of responses to the SFC’s and HKMA’s joint annual survey on the sale of non-exchange-traded investment products by Type 1 or 4 licensed corporations and registered institutions for the year 2023 is coming up – see the circular of 8 December 2023. Licensed entities that did not sell any non-exchange traded investment products during 2023 should have already submitted their survey by 19 January 2024. Licensed entities that sold non-exchanges traded investment products must submit their completed survey by 23 February 2024 (where their total transaction amounts were below HK$1 billion) or 8 March 2024 (where the total transaction amounts of HK$1 billion or above).
