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Amendments to Hong Kong's Anti-Money Laundering Ordinance

Contributed by MB Consultants (HK) Ltd
24 June, 2020


An amendment to Hong Kong's Anti-Money Laundering Ordinance ("AMLO") issued on March 2018 has established a licensing regime for trust or company service providers ("TCSPs").

On the commencement of Part 5A of the AMLO, which came into effect on the 01st of March, 2018, a new licensing regime for TCSPs is implemented and enhances the requirements to the designated professionals, who must comply with the correspondent due diligence and record-keeping requirements.

Any company remains obliged to comply with the strict requirements of the AMLO and the Company Registry. TCSPs licencees should take steps to keep customer information (customer due diligence (CDD)) up-to-date and undertake periodic reviews of existing records of customers.

CDD measures prescribed in Schedule 2 to AMLO:

  • identifying the customer and verifying the customer's identity;
  • identifying the beneficial owner and taking reasonable measures to verify the beneficial owner's identity;
  • obtaining information on the purpose and intended nature of the business relationship (if any) established with the TCSP licencee unless the purpose and intended nature are obvious;
  • identifying the person purporting to act on behalf of the customer and taking reasonable measures to verify the person's identity.

CDD measures must be carried out:

  • before establishing business relationship with the customer;
  • before carrying out an occasional transaction involving $120,000 or above;
  • when there is a suspicion that the customer or the customer's account is involved in money laundering and terrorist financing;
  • when there are doubts on the veracity or adequacy of the information obtained during CDD process.

If CDD requirements are not complied with, a business relationship or an occasional transaction with that customer MUST NOT be established. If a business relationship has been established, it must be terminated as soon as reasonably practicable.

For pre-existing customers (i.e. business relationship established before 1st March 2018)

a) Conduct CDD when:

  • an unusual or suspicious transaction takes place; or
  • a transaction not consistent with the TCSP licencee's knowledge of the customer or the customer's business or risk profile, etc., takes place; or
  • a material change occurs in the way in which the customer's account is operated.

b) If the TCSP licencee fails to comply with the CDD requirements in respect of pre-existing customers, it must terminate the business relationship.

Enhanced Due Diligence (EDD)

If a customer has not been physically present for identification purposes, the TCSP licencee must carry out at least one of the following measures to mitigate the risk posed:

  • Further verifying the customer's identity on the basis of documents, data or information not previously used for the purposes of verification of the customer's identity;
  • Taking supplementary measures to verify all the information provided by the customer; or
  • Ensuring that the first payment made into the customer's account is received from an account in the customer's name with an authorized institution, or a financial institution operating in an equivalent jurisdiction that has measures in place to ensure compliance with AML/CFT requirements similar to those in Schedule 2 and is supervised for compliance with those requirements by a designated authority

Politically Exposed Persons ("PEPs")

Before establishing a business relationship, or continuing an existing business relationship where the customer or the beneficial owner is subsequently found to be a PEP, a TCSP licencee should carry out the following EDD measures:

  • take reasonable measures to establish the customer's or the beneficial owner's source of wealth and the source of the funds.

Ongoing Due Diligence

Requirement Continuously monitor business relationships:

  • Reviewing from time to time the documents, data and information relating to the customer obtained for the purpose of complying with Part 2 of Schedule 2 to ensure they are up-to-date and relevant;
  • Monitoring the transactions of the customer to ensure that they are consistent with the nature of the business, the risk profile and source of funds; and
  • Identifying transactions that are complex, large or unusual or patterns of transactions that have no apparent economic or lawful purpose, and examining the background and purposes of those transactions and setting out its findings in writing.

Record-Keeping Requirements

a) Duty to keep records:

  • In relation to a transaction - records should be kept for at least 5 years after the completion of the transaction;
  • In relation to a customer - records should be kept throughout the continuance of the business relationship with the customer and for a period of at least 5 years after the end of the business relationship.

b) Records to be kept:

  • In relation to a transaction - the original or a copy of the documents, and a record of the data and information, obtained in connection with the transaction;
  • In relation to a customer - the original or a copy of the documents, and a record of the data and information, obtained in the course of identifying and verifying the identity of the customer or any beneficial owner of the customer; and
  • the original or a copy of the files relating to the customer's account and business correspondence with the customer and any beneficial owner of the customer.

The information and details of beneficial owners is closed for public and can be disclosed only by below authorities request:

  • Companies Registry
  • Customs and Excise Department
  • Hong Kong Monetary Authority
  • Hong Kong Police Force
  • Immigration Department
  • Inland Revenue Department
  • Insurance Authority
  • Independent Commission Against Corruption
  • Securities and Futures Commission

Since 25th of July 2008, Contributed by MB Consultants (HK) Ltd adheres to the highest standards of professionalism. We try to stay focused on the client and his/her needs by providing him/her with the best service we possibly can. Our Company successfully passed the required Company Registry's fit and proper tests and were granted the licence on 27th of July 2018.

This licence and the positive reviews from our clients are the hallmark of the fair company.




 


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