Hong Kong's SFC Halts Activities of IDS Forex HK, Suspects Money Laundering

The Securities and Futures Commission (SFC) today issued a Restriction Notice on IDS Forex HK Limited prohibiting the firm from carrying on all activities for which it is licensed, disposing of or dealing with any assets held by it or held on behalf of its clients, and assisting, counselling or procuring another person to dispose of or deal with any such property without the SFC's prior written consent (Note 1).

The SFC's action follows a self-report notification by IDS on 5 June 2017 informing the SFC that its sole shareholder, Mr Kim Sunghun, a Korean passport holder, was convicted of illegal fund-raising and fraud in Korea and was sentenced to 12 years imprisonment on 3 February 2017. The extensive fraudulent scheme involved Mr Kim soliciting investors since 2011 to invest in business carried on by him outside Korea, which included margin forex business.

The SFC has reason to believe that the capital injections made by Mr Kim into IDS may be wholly, or in part, proceeds of crime, and may be an attempt to launder the proceeds of crime, and that IDS conducted no business operations in the past three years as reasonably expected of a fit and proper licensed corporation.

The SFC has serious doubts about IDS's reputation and character as well as its fitness and properness to remain licensed (Note 2), and has commenced an investigation in light of the above information. As such, the SFC considers it necessary to prevent any further regulated activity by IDS, and any disposals or dealings in the relevant property of IDS, while its investigation continues. Furthermore, it is desirable in the interest of the investing public and in the public interest to impose on IDS the prohibitions set out in the Restriction Notice.

Notes:

1. The Restriction Notice is issued pursuant to sections 204 and 205 of the Securities and Futures Ordinance.
2. IDS is a corporation licensed under the SFO to carry on Type 3 (leveraged foreign exchange trading), Type 4 (advising on securities) and Type 9 (asset management) regulated activities.