Licensing Regime for Hong Kong Trust and Company Service Providers

Hong Kong has recently introduced the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Bill 2017, which, when enacted, will provide a licensing regime for trust and / or company service providers (TCSPs) and to prescribe statutory KYC and record-keeping requirements applicable to TCSPs.

The legislation comes into effect on 1 March 2018. The legislation is designed to allow Hong Kong to meet its obligations as a member to the Financial Action Task Force (FATF) in relation to various recommendations made by the FATF to combat money laundering and terrorist-financing. The legislation is similar to that which has been in place in various offshore financial centers, including the British Virgin Islands and Cayman Islands for some considerable length of time and more recently in Singapore.

Whilst the new regime will have far reaching implications for trustees and company service providers in Hong Kong, it does bring Hong Kong back into line with the other major global financial centers. Many in the industry think it is long overdue.

The main features are:

  • The new regime will be administered by the Companies Registry, which will keep a register of all licensees.
  • All licenced TCSP’s must comply with the statutory KYC and record-keeping requirements.
  • The legislation will apply to (inter alia) any business (sole proprietor, company or partnership):
    • acting as a formation agent;
    • acting as a director or secretary or arranging for another person to do so;
    • providing registered office services;
    • acting as a director or secretary or arranging for another person to do so;
    • providing registered office services;
    • acting as a trustee or arranging for another person to do so;
    • acting as or arranging for another person to act as a nominee shareholder.
  • Applicants will be subject to a “fit and proper” test.
  • Non-compliance with the regime is an offence punishable by fine and imprisonment.
  • There is a 120 day transitional period from 1 March 2018 to apply for a licence.

In addition to the above, another piece of legislation, the Companies (Amendment) Bill 2017, has also been introduced, which will require every company incorporated in Hong Kong, other than listed companies on the Hong Kong Stock Exchange, to maintain a register of all persons who have significant control of the company.
In our next bulletin we will provide an update on what this will mean for TCSP’s in Hong Kong.

If you have any questions, please feel free to contact Barry Mitchell: barry.mitchell@amsfinancial.com, (852) 2147 2108 (office) / (852) 9096 1004 (mobile).