If you provide financial services in Hong Kong, most likely you will need to obtain a license in Hong Kong.
In this article, we will consider the Money Service Operators License (hereinafter the MSO license) - a financial services operator license that allows a company to provide money exchange and money transfer services.
A money exchange service is a currency exchange that is made in Hong Kong or from Hong Kong, but is not a secondary service to the main business: for example, a retail business in which there is a need to accept foreign currency if this service:
- operates in a hotel mainly for the convenience of guests;
- exchanges foreign currency into the local currency of Hong Kong.
Money transfer service means one or more of the services listed below that are provided in or out of Hong Kong:
- sending or arranging money transfers to a place outside Hong Kong;
- receipt or organization of receipt of funds from any place outside Hong Kong;
- organization of receipt of funds in a place outside of Hong Kong.
If the company operates without a license, it will be punished with a fine of 100,000 USD and imprisonment for 6 months.
The license can be issued both to a local company and to a foreign one. An applicant for an MSO license may be:
- Hong Kong-based limited liability company;
- Unlimited company;
- Foreign company.
But despite the fact that the license is available for both local and foreign companies, there is a requirement for an office in Hong Kong.
It is worth considering in more detail the requirements for the rental of premises, as this is one of the stages of verification before the license is obtained.
At the initial application, you need to collect a certain package of documents. These are documents on the company, on its members, a business plan, AML policy, as well as documents to confirm the address/office of the company.
Documents confirming that the company has registered premises are a lease, at least two photographs 102x152 mm (i.e., 4R size). One photo should show the inner space, and the second should show the exterior. It is also necessary to attach the layout of the room.
If photos are not submitted in accordance with the requirements for a new application for a license, the application will be considered invalid and will not be processed by C&ED.
After checking all the documents, the authorized body issues additional forms that indicate the missing documents, if any. If everything is OK with the documents, the applicant pays the fees, after which an interview is organized. The interview is held with a C&ED authorized person in Hong Kong.
Further, HK Customs will conduct an audit of individuals and companies, as well as an inspection of business premises on site.
After receiving the results of the review, it will be necessary to appoint a Compliance Officer and an AML Officer. All financial institutions must verify the identity of the client and keep records when opening an account for new clients or when conducting transactions that exceed legal thresholds - transfer of more than 8,000 Hong Kong dollars or cash transactions of more than 120,000 Hong Kong dollars. No transaction should be carried out without receiving relevant documents from customers.
A licensee must comply with all applicable AMLO (Anti-Money Laundering and Counter-Terrorist Financing Ordinance) provisions.
Let's analyze the main responsibilities of the MSO company:
- the licensee is obliged to report suspicious transactions;
- the licensee must develop and maintain an effective AML policy;
- all company members are required to comply with the business and ethical requirements of Hong Kong law;
- the licensee must obtain the written consent of those who are in the office to conduct inspections of the company;
- The license must be visible in the office;
- the licensee must submit reports to the CCE (Commissioner of Customs and Excise) within two weeks after the end of each quarter, unless otherwise specified individually, by written notice. Late submission of the interim report may lead to suspension and/or cancellation of the license;
- the licensee is required to report suspicious transactions in accordance with the requirements of AMLO (Anti-Money Laundering and Counter-Terrorist Financing Ordinance).
As you can see, the requirements in Hong Kong for MSO license holders are quite loyal and, importantly, affordable. Thus, a Hong Kong resident or a non-resident can organize a company in this territory. There are no requirements to pay authorized capital. Positions of Compliance Officer and AML Officer can be combined in one person. The whole process also takes a relatively short time, in comparison with the requirements of the EU countries. In Hong Kong, with the collected package of documents and established workflow, you can organize a business and get a license within 4-6 months.
