KVB Kunlun Financial Group Limited announced this Thursday that following legal advice, it will disengage any clients from the People’s Republic of China of its subsidiaries in Australia and New Zealand.
“In line with the advice from the Company’s legal advisers on the PRC laws, a detailed survey of the Group’s Existing Ethnic Chinese Clients will be conducted with a view to identifying anyone who is, or who may possibly be, classified as a PRC domestic client,” the statement released today said.
“Any person identified as an actual or potential PRC domestic client will then be disengaged as soon as possible (“Identification and Disengagement of PRC Domestic Clients”),” the statement continued.
ASIC Orders Firms to Suspend Onboarding Overseas Clients
The announcement from the Group follows on from the Australian Securities and Investments Commission (ASIC) issuing firms an urgent letter in April to suspend on-boarding clients from overseas, where the firms are not regulated.
As Finance Magnates reported, although the focus of the regulator’s message could have been pointing at the European Union, the letter specifically mentioned China, a country that is integral to Australia’s economy.
On the 18th of April, the Aussie regulator then sent out another letter to clarify its demands. The letter, seen by Finance Magnates, outlines that the media release that outraged the industry earlier in the month is getting a revaluation.
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As Finance Magnates analyzed at the time, ASIC revised the timetable and recommendations to brokers. However, the watchdog said that brokers will still need to send some information to the regulator and that firms should seek legal advice on the legality of their offering in respective jurisdictions. That includes the ways in which the firms are soliciting their clients.
Today’s announcement from KVB Kunlun states that the company did exactly that and will now work on complying with ASIC’s demands.
According to the retail broker, the online foreign exchange (forex) margin trading platform of the Group’s Australian and New Zealand subsidiaries is targeted towards ethnic Chinese clients, among others, and the broker does have clients with Chinese names.
The broker has not given any indication as to how many clients could be impacted by this decision nor what kind of effect this could have on its operations.
Australian Brokers Bend to ASIC’s Will
KVB Kunlun is not the first to announce it has made the decision to disengage clients from China. As Finance Magnates reported last week, Vantage FX announced that it has ceased providing services to clients outside of Australia via its local subsidiary Vantage Global Prime.
Before that, IFGM announced that it would start refunding non-Australian clients and confirmed that it would no longer be providing services to clients outside of the country.