Money Service Operators

INTERSHORES I Hong Kong Money Service Operators (MSO) License

General Information & Governing Authority 

Any person operating a money service is required to be licensed with the Commissioner of Customs and Excise pursuant to the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance, Chapter 615 (AMLO). 

 

What is Money Service Operators Service (MSO) ? 

Money service operators service includes money changing service or a remittance service.  A money changing service means a service for exchanging of currencies that is operated in Hong Kong as a business, but does not include such a service:

 

1.    that is incidental to the main business e.g. retail business accepting foreign currencies in transactions.

2.    that is operated by a person who manages a hotel if the service.

i)     is operated within the premises of the hotel primarily for the convenience of guests of the hotel.

ii)   consists solely of transactions for the purchase by that person of non‐Hong Kong currencies in exchange for Hong Kong currency.

 

A remittance service means a service of one or more of the following that is operated in Hong Kong as a business:

1.    sending, or arranging for the sending of, money to a place outside Hong Kong.

2.    receiving, or arranging for the receipt of, money from a place outside Hong Kong.

3.    arranging for the receipt of money in a place outside Hong Kong.

 

A person, a partnership or a company can apply for a MSO license.

 

It is an offence to operate a money service in Hong Kong without a license. Section 29(2) of the AMLO provides that a person who commits an offence under section 29 (1) is liable on conviction to a fine of HK$100,000 and imprisonment up to 6 months.

 

Licensing Criteria

The Licensing Court is responsible for approval of applications for MSO license in consideration of the following conditions :

 

1.    Whether the applicant is a fit and proper person to carry on the business.

 

2.  Whether the premises to which the application relates is suitable for the carrying on of the business. There must be a local management office/Local Space for Storage of Books and Records. Photo of the office has to be submitted at application.

 

3.   A payment system together with a satisfactory Anti Money Laundering and Counter Terrorists Financing system so as to carry out the carry out the business properly.

 

4.   There must be qualified Compliance Officer (CO) and Money Laundering Reporting Officer (MLRO) to carry out due diligence, record keeping, quarterly transaction reporting and suspicious transaction reporting. He is responsible for regular reporting.  The CO/MLRO must either be a HK resident or be ordinarily reside in Hong Kong.

 

5.  The company must have internal monitoring system specifically on regular audit by qualified person (i.e. internal compliance audit) with similar experiences to test all the company’s procedures including but not limited to risk identification & assessment, on-going monitoring, staff training, etc. are adhered to throughout the business. Instead of financial audit function, this is internal compliance audit function.

 

6.  An independent compliance audit (external compliance audit) must also be arranged on a regular basis.

 

7.    Preferrably with a bank account at application or a reasonable explanation stating why business can be carried out without a bank account.

 

Remarks:  For account opening, most of the banks in HK require a compliance audit review on AML & CTF system in consideration of account opening.

 

Licensing Procedure

1.       Submission of Documents.

Application forms together with essential docunments of Business Plan and anti-money laundering (“AML”) & counter terrorist financing (“CTF”) Polices.

 

2.      Acknowledgement.

Upon receipt of application, the Hong Kong Customs and Excise Department (CED) will issue an acknowledgement receipt of the application.

 

3.      Notice for Outstanding Documents.

i.       The applicant will be issued a reminder for the provision of any outstanding documents, where ever necessary.

ii.      In case the applicant fails to provide the required information on the application forms and the annexure, including the AML/CFT Policy and Business Plan within the specified period of time, the application will be considered invalid. Such an invalid application will not be processed by Hong Kong’s Customs and Excise Department.

 

4.     CED Interview and Payment of Fees.

i.     After Feb 2020 under the new licensing regime, the authority looks into the submitted documents on totality to justify if the applicant qualified for an interview to proceed the application further. If satisfied, the applicant will receive an interview notice when all the requisite documents are in order.   With the notice, a slip will be attached for payment of requisite fee for the Money Service Operator Licence.

ii.   The objective of the interview is to find out the applicant’s representatives’ knowledge of the AML/CFT and the system created for AML/CTL.

iii.   The applicant has to bring original documents for attending an interview with the CED officers at the designated time allotted.

 

5.     Application Execution.

i.     The original documents will be verified by the officers of the Customs and Excise department.

ii.    After verification, the applicant should sign on the application for a Money Service Operator License in the presence of the officers of the Custom and Excise Department. 

 

The processing time of the application for a Money Service Operator License in Hong Kong may depend and vary on the various factors. These factors include the time taken in doing the on‐site inspection at the premises of the business, collection of the requisite documents from the applicant, and the time period required to obtain the records from other authorities to perform the fit and proper person test of the applicants.

                                                           

It will take at least 6 months to approve the license and will be on case-by-case.

 

What Are The Essential Documents?

The essential documents for obtaining a Money Service Operator License in Hong Kong are as follows:

1.     The statutory documents of the applicant, such as certificate of incorporation, business registration documents etc.

2.     The supporting documents of the particulars of each premises, such as the floor plan and tenancy agreement.

3.   The supporting documents of the individual partner, owners or directors of the applicant, known as the Fit and Proper Person Declaration Forms.

4.     An authorization letter signed by all the Board of Directors or partners authorizing the application.

5.     Business plan.

6.     A CFT/AML policy.

 

The officers may ask for additional documents as the case may be required.

 

Validity of License and Renewal 

Upon approval of application, the CED will issue the MSO license to the applicant. The license will specify:

1.    the address of every premises in which the licensee may operate a money service.

2.    the conditions imposed or amended pursuant to the AMLO.

3.   the period for which the license is valid. The name and premises for operating money service of each licensee will be provided in the Register of Licensees of the CED.

 

Normally, the MSO License has a validity period of 2 years. Hence the licensee shall apply for renewal of license before expiration to continue its operation of money service.

 

What Are The Obligations of The Licensee After Obtaining An License?

The obligations of licensee after obtaining a Money Service Operator License in Hong Kong are as follows:

A licensee of the Money Service Operator License is authorized to comply with all the prescribed provisions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance or AMLO and all other rules issued by the CED of Hong Kong.

 

A list of the primary obligations of the licensee is outlined below:

1.    The individual, director, partner or  owner in relation to the licensee should satisfy the criteria for the proper and fit requirements.

2.    A licensee should secure the consent in writing of all the occupants of the premises that are the domestic premises for the official person to conduct the routine inspection.

3.    A licensee who is licensed to operate a Money Service Operator in Hong Kong at the premises specified in the Money Service Operator Licence is required to display the exact and original form of the Money Service Operator Licence in a noticeable place at the premises specified.

4.    A licensee is required to maintain an LPS or Local Place for Storage of books and records.

5.   Where a licensee functions a money service in Hong Kong without any specified particular premises, the licensee of the Money Service Operator should maintain an LMO or Local Management Office. The licensee should ensure that the LMO or Local Management Office is able to serve as a point of contact for interfacing with the Hong Kong’s Customs and Excise Department.

6.   A licensee is required to maintain and develop an effective CFT/AML Policy to decrease the Money Laundering and Terrorist Financing risks.

7.    A licensee is required to report on any suspicious transactions.

8.   A licensee should submit the periodic return to the CCE or Commissioner of Customs and Excise in a prescribed manner timely.

9.  Where any bank account is opened to be used for the operation of the money service business, such an opened bank account is required to be in the company’s name of the partner, licensee, the sole proprietor, director, or ultimate owner of the business.

 

Can An Appeal Against The Decision of The Commissioner Of Customs And Excise For The Refusal To Grant A Money Service Operator License In Hong Kong

The applicant for grant of a Money Service Operator License in Hong Kong is eligible to file an appeal against the decision of the CED.  The appeal can be filed by the applicant to Anti-Money Laundering and Counter-Terrorist Financing or AMLO Review Tribunal.

 

The time period is 21 days to file an appeal with the Review Tribunal.  This time period of 21 dyas to file an appeal is counted from the receipt of the notice informing the applicant of the refusal of grant of a Money Service Operator License in Hong Kong.

 

INTERSHORES' Services

INTERSHORES can assist:

1.    To assess the current situation applicant in getting the license.

2.    To form a Hong Kong company for this purpose.

3.    To rent an office at an cost-effective manner as the operating office.

4.    To employ a compliance officer and a money laundering reporting officer.

5.    To fine tune the existing business plan for the applicant.

6.    To prepare AML & CTF policy for the applicant.

7.    To arrange internal /external compliance audit function as required.

8.    To prepare all the required documents for license application.

9.    To liaise with case officers of Custom & Excise Department.

10.  To attend interview with Custom & Excise Department (the applicant has to be present at the interview).

11.  To liaise with authorities until outcome of the application or issuance or license by licensing court.

12.  If approved, to collect the license from the licensing court.

13.  To open bank account.

14.  To arrange compliance audit review for bank account opening purpose.

15.  To inform the Custom & Excise Department on the bank account particularly for the applicant.

 

Feel free to contact us to discuss your needs: 

 

Whatsapp : (852) 6499 4686

Phone : (852) 2186 6936

Email : info@intershores.hk

 

 

Disclaimer:

Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use.  In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice.

 

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