Trust and Corporate Services Provider (TCSP) Licensing in Hong Kong
Contributed by Paifang Limited
19 October, 2018
In an effort to enhance Hong Kong's regulatory regime for combating money laundering and terrorist financing, a new licensing regime for trust or company service providers (TCSPs) and new requirements on the keeping of significant controllers registers (SCR) by companies took effect on March 1st, 2018.
The new licensing regime for TCSPs has been introduced under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) to require TCSPs to apply for a licence from the Registrar of Companies. TCSPs must satisfy a "fit and proper" test before they can provide trust or company services as a business in Hong Kong. Any person who carries on a trust or company service business in Hong Kong without a licence commits an offence.
A TCSP licensee can provide the following services:
1) forming corporation or other legal persons;
2) acting, or arranging for another person to act as a director or a secretary of a corporation;
3) provide a registered office, business address, correspondence, administrative address for a corporation;
4) acting, or arranging for another person to act -
as a trustee of an express trust or a similar arrangement; or
as a nominee shareholder for a person other than a corporation.
TCSP licensees are required to mitigate the risk of money laundering / terrorist financing (ML/TF) and to comply with the anti-money laundering / counter-terrorist financing (AML/CTF) requirements under the Ordinance. TCSP licensees are also required to develop and implement policies, procedures, and controls on relevant operational areas so as to meet the requirements set out under Schedule 2 of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap.615).
In order to devise policies, the following aspects must be considered:
1) Risk assessment;
2) Customer due diligence measures
3) Record keeping
4) Ongoing monitoring of customers
5) Staff training
6) Suspicious transactions reporting
To enhance transparency of corporate beneficial ownership in order to fulfil Hong Kong's international obligations, the Companies Ordinance (Cap. 622) is amended to require a company incorporated in Hong Kong to obtain and maintain up-to-date beneficial ownership information by way of keeping a Significant Controllers Register. All companies are required to identify a person/persons who has/have significant control over the company and maintain a Significant Controllers Register which will be accessible by law enforcement officers upon demand. Each company must also designate at least one person as its representative to provide assistance relating to the Significant Controllers Registers of the company to law enforcement officers.
These amendment ordinances bring Hong Kong's regulatory regime up to date and in line with international requirements as promulgated by the Financial Action Task Force (FATF). The FATF is an inter-governmental body that sets international standards on combating money laundering and terrorist financing. Hong Kong has been a member of the FATF since 1991. In conclusion, these amendment ordinances help to fulfil the relevant FATF obligations, and will further reduce the risk of money laundering and terrorist financing in Hong Kong. This will safeguard the integrity of Hong Kong as an international financial centre, and add to our credibility as a trusted and competitive place to do business.
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