Hong Kong is stepping up to combat financial crimes and enhancing its reputation as a reliable global business centre. Christopher Wilson, the executive director of enforcement at the Securities and Futures Commissions (SFC), articulates the organisation's goals in upholding regulatory standards and offers guidance for general counsel to champion a culture of compliance.
ALB: What are some of the important trends you are foreseeing in the regulatory realm against financial fraud and investigations?
Wilson: Our recent enforcement actions have highlighted our focus on holding senior executives accountable for corporate misconduct, tackling syndicate market manipulation activities and disrupting virtual asset-related frauds.
There is no doubt that fraudsters are getting better at exploiting jurisdictional arbitrage and leveraging technology to expand their reach, avoid detection and appear more authentic. Fortunately, we are also getting better: we are adapting our enforcement strategies to counter these new threats, through enhanced collaboration and prioritising on technological innovation.
Collaboration with other regulatory bodies, both at home and abroad, is key. We are stepping up collaboration with our regulatory counterparts locally to leverage each other’s most effective disciplinary and sanction powers to better protect investors and expedite enforcement outcomes. Outside of Hong Kong, we have significantly strengthened our relationship with Mainland and overseas regulators to step up intelligence exchange and enforcement cooperation.
We have an enormous amount of data. We are using these data sets to spot novel market abuse patterns, highlight areas requiring intervention and track the impact of regulatory policy changes. To combat online scams, we are adopting artificial intelligence (AI) for monitoring social media platforms and identifying risk content. We are also exploring AI-assisted solutions to automate repetitive tasks, freeing up staff to focus on high-impact cases that deliver the strongest deterrence.
ALB: What steps should corporations be taking to prioritise compliance, and what role should general counsel play in the process?
Wilson: I'm a firm believer in a top-down compliance culture with strong leadership commitment. Compliance, legal and other risk functions should not be seen as a cost centre. They are the best investments a company can make to protect itself and its management.
The role of the general counsel in promoting a “compliance culture” is vital. As a trusted advisor to the board and senior management, the general counsel must be fully informed of the company’s businesses in order to ensure that the board and management comply with applicable rules such as timely disclosure of inside information for listed corporations. When the SFC requests documentary evidence, the general counsel should encourage clients to retrieve the necessary documents and avoid delay.
General counsel advising licensed corporations should remind business units that adequate internal controls and risk management procedures are critical in mitigating risks. Compliance specialists should proactively identify and escalate red flags and seek explanations when things seem awry.
Compliance is a collective effort, and general counsel play a pivotal role in helping to “set the tone” to help ensure that the management team and other key business line managers are operating the company within the boundaries of the law at all times.
ALB: What are the effective ways for financial regulators to engage institutional players and private sectors to enhance the enforcement of white-collar crimes?
Wilson: As regulators, we keep a close eye on the regulatory landscape and keep up with market developments. We’re constantly engaging with stakeholders and seeking feedback from market participants. This helps us stay nimble and ensure that we’re effective and responsive to changes in the market.
On top of everything else, we want to create an environment of openness and transparency to minimise uncertainty for market participants. That’s why we issue guidelines, conduct consultations and publish reports. By keeping stakeholders well-informed, they can adjust their operations accordingly and navigate any changes with confidence.
We urge licensed corporations to do the same, by establishing clear and accessible channels for employees to report misconduct promptly. It's important not to turn a blind eye to any suspicious activities or red flags that could indicate potential fraud or market misconduct. Any matters of concern should be swiftly investigated and reported to the relevant authorities.
The SFC has implemented a series of measures to reinforce information dissemination and investor education through dedicated alert lists, press releases, social media posts and publicity campaigns to warn the public about the common tactics of financial fraudsters.
Forging effective partnerships with institutional players and private sectors is crucial in fighting white-collar crime. No single entity or jurisdiction alone can tackle the challenges we face today. We must make collective efforts to share intelligence, close regulatory gaps and address potential vulnerabilities so that we can stay one step ahead of the bad actors. I really do think our interests are aligned here.
