CmaBoardReleases
Title: Announcement regarding issuance of Disciplinary Board Resolution No. (14/2023) Disciplinary Board - (143/2022) Authority and imposition of a warning against KIC Financial Brokerage Company for violating the Rules of Module Sixteen of the Executive Bylaws of Law No. 7 of 2010 and their Amendments
Announcement regarding issuance of Disciplinary Board Resolution No. (14/2023) Disciplinary Board - (143/2022) Authority and imposition of a warning against:
KIC Financial Brokerage Company
For violating the rules of Module Sixteen of the Executive Bylaws of Law No. 7 of 2010 and their amendments
For the following reasons:
1) Violation of the provision of Item (6) of Article (2-3) of Module Sixteen which stipulates “A Licensed Person is required to:
6. Put in place processes to identify, monitor, manage and mitigate money laundering and terrorism financing risks, giving consideration to:
a. Risk client.”
It was proven to the CMA after reviewing the study of risk assessment and the underlying information, submitted by the Company within the primary information, that the mentioned study is continuously inadequate.
2) Violation of the provision of Item (2) of Article (3-19) of the mentioned Module which stipulates:
“A Licensed Person must perform enhanced due diligence on higher risk clients. Among the measures to be applied as a minimum:
2. Obtaining additional information on the purpose and reasons for opening the account, business or employment background, source of funds, identification data of the client and beneficial owner and on the intend nature of the business relationship.”
3) Violation of the provision of Article (4-1) of the mentioned Module which stipulates:
“Data collected under CDD must be kept up-to-date, accurate and relevant. The Licensed Person must undertake a periodical and continuous review …”.
It was proven to the CMA after reviewing the selected segment of clients that the Company repeated its failure to update the Know Your Clients forms (KYC) for some of its clients.
4) Violation of the provision of Article (4-7) of the mentioned Module which stipulates:
“A Licensed Person shall keep all CDD records, account files and business correspondence for at least five years after the account is closed.”
It was proven to the CMA through reviewing the selected segment of the Company’s clients whose transactions were closed that the company failed to keep some CDD records of that category within the period mentioned in the above Article.
It should be noted that these violations are procedural and not substantive.
The Resolution included the infliction of the following penalty: -
" Levying a warning on KIC Financial Brokerage Company for the attributed violations due to correlation.”
In this regard, the CMA emphasizes the implementation of CMA Law and its Executive Bylaws on all persons dealing in securities activities, and urges them to comply with these Laws in order to promote investors' confidence, create a sound investment environment, and implement the Law according to the principles of fairness, transparency, and integrity in line with the best international practice.