Licensing Regime for Hong Kong Trust or Company Service Providers
An amendment to Hong Kong’s anti-money laundering law has established a licensing regime for trust or company service providers (TCSPs).
The Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Ordinance (Cap. 615) (AMLO), which came into effect on March 1, 2018 also strengthens due diligence commitments on the part of designated non-financial businesses and professionals (DNFBPs).
Licensing regime introduced for trust or company service providers
Under AMLO, trusts or company service providers (TCSPs) operating in Hong Kong will require a license from the Registrar of Companies after satisfying a “fit and proper” test.
This test will account for factors such as the applicant’s criminal and bankruptcy history and that of each of the applicant’s owners, directors, or partners.
The license will be valid for three years or a shorter period depending on the Registrar’s judgment.
The Registrar may grant, renew, suspend, or revoke a license or impose conditions on a TCSP applicant.
The Registrar must also approve any new ultimate owner, partner, or director of a licensed TCSP.
Penalty for incompliance
Failing to comply with the due diligence and record-keeping requirements of Schedule 2 of the AMLO will incur a public reprimand from the Registrar of Companies.
The Registrar also has the power to order an incompliant licensee to take remedial actions or impose a penalty of up to HK$500,000 (US$63,741).
(See here for the official guidelines on the imposition of pecuniary penalty for incompliance by TCSP licensees.)
TCSP licensee with branches, subsidiaries outside Hong Kong
A TCSP licensee, which is incorporated in Hong Kong, but has branches or subsidiary undertakings outside Hong Kong should ensure that: the customer due diligence and record-keeping requirements under AMLO are implemented across all the branches or subsidiary undertakings carrying on the same business as the licensee – to the extent permitted by the law of that place.
If a branch or subsidiary undertaking is unable to observe this compliance, the licensee must notify the Registrar and take additional measures to mitigate any money laundering or terrorist financing risks that the branch or subsidiary undertaking may be exposed to.
Applying for a TCSP license
A new website – https://www.tcsp.cr.gov.hk/tcspls/portal/form – has been set up to provide detailed information relating to the new licensing regime, including External Circulars, relevant Guidelines, specified forms and frequently asked questions. Applicants can search the Register of TCSP Licensees on the website.
From March 1, 2018, all applicants for TCSP licenses may submit their applications electronically through the website after completion of simple user registration procedures.
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