In Hong Kong, anyone intending to carry out “money services” must apply for a Hong Kong Money Service Operator (MSO) license from the Customs and Excise Department under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (“AMLO”). The Anti-Money Laundering Ordinance provides a regulatory framework for money service providers that is overseen by the Hong Kong Commissioner of Customs and Excise (“CCE”). Money service operators must apply for a MSO license in Hong Kong under this framework, unless exempted, and must comply with conduct of business standards.
Tetra Consultants’ team of expert attorneys and chartered accountants has years of experience securing relevant payment license for our international clients intending to operate money service business in the jurisdiction of their choice. Our service package for securing an MSO license in Hong Kong includes everything you need to register company in Hong Kong and submission of MSO license application in Hong Kong. Tetra Consultants through this article aims to guide a beginner on the 7 important things to know about MSO license in Hong Kong.
7 things to know about MSO license in Hong Kong
What are money services:
- The definition of “money services” under the AMLO covers two types of services operating in Hong Kong: “money changing service” and “remittance service”.
- “Money changing service” is, as the name suggests, the service of exchanging of currencies (but note that it does not include the typical service exchange of foreign currencies for local currencies by tourists at hotel counters, which is considered “incidental”).
- On the other hand, “remittance service” is defined to mean the transfer of funds from Hong Kong to a place outside of Hong Kong or the receipt of funds in Hong Kong from a place outside of Hong Kong. It also includes any arrangements for such transfer or receipt.
- Money services under the AMLO are not limited to the traditional physical counters providing money changing or remittance services but also cover mobile operations with no fixed premises, including online operations, as will be discussed below.
What are the benefits:
The benefits of obtaining an MSO License in Hong Kong are as follows:
- Hongkong is one of the leading business centers in Asia;
- There is a possibility to provide types of financial services as currency exchange and money transfers;
- There is also an opportunity to buy an already existing MSO License in Hong Kong; and
- The procedure for obtaining an MSO License is relatively fast.
Who is the regulatory authority:
The Hong Kong Customs and Excise Department, a distinct authority, is in charge of policing payment service operations in Hong Kong. Since July 1, 2012, HK C&ED (Hong Kong Customs and Excise Department) had undertaken to conduct the regulatory supervision for MSOs (Money Service Operators). Only this one financial service is under the supervision and regulation of this government agency. Either the SFC (Securities and Futures Commission) or the HKMA (Hong Kong Monetary Authority) oversees and regulates all other financial services. Compared to the HKMA and the SFC, HKC&ED has less stringent oversight requirements.
Typically, financial institutions that are already subject to other regulations are exempt from the MSO license requirement. As a result, authorized institutions such as banks, restricted license banks, or deposit-taking companies regulated by the Hong Kong Monetary Authority, corporations licensed by the Securities and Futures Commission, insurers approved by the Insurance Authority (“IA”), and insurance brokers or agents licensed by the IA are exempt from MSO licensing.
Who is eligible:
According to the AMLO, an MSO license can be granted by the Commissioner of Customs and Excise to any applicant as long as the following conditions are met:
- If the applicant is an individual, each individual and the ultimate owner must be a fit and proper person to operate a money service.
- If the applicant is a business partnership, each partner and ultimate owner of the partnership must be a fit and proper person to operate a money service
- If the applicant is a corporation, each director and ultimate owner of the corporation must be a fit and proper person to be affiliated with the business and to operate a money service.
- All applicants for the MSO License must complete a form of fit and proper person declaration.
What are the requirements:
In order to attain MSO authorization following requirements have to be complied with:
- An MSO license can be obtained by a Hong Kong-registered company with limited and unlimited liability, as well as a foreign one, this means that it can be obtained by both a resident and a non-resident.
- A company wishing to obtain an MSO license must pass a special test that is aimed at identifying unreliable or corrupt people.
- After that, an obligatory requirement is that the company must register the premises at a specific address. In such a room, meetings with partners and clients are held, questions about the main activity are resolved and advertising activities are carried out. And the work must be under the control of the licensee (landlord or tenant). The choice of premises must be approved by a representative of the Customs and Excise Department.
What are the documents required:
- The management of a company wishing to engage in financial transactions submits a certain package of documents to the company, which will deal with obtaining a license and pays a fee for filing an application with the Customs and Excise Department.
- After that, a special interview is held and a special form is issued for entering other necessary information. Usually, the company dealing with the matter of obtaining a license accompanies the applicant at all stages starting with its registration until the license is obtained. The main documents for obtaining an MSO license are information about the company, and its members, confirming the office address, business plan, and related AML policies. It must be remembered that a bankrupt company, not reinstated in rights, and also having managers with a criminal record of any nature, cannot obtain a license.
Validity of Hongkong MSO License:
In most cases, an MSO license is valid for a period of two years in Hong Kong after which the license has to be renewed. All applicants who wish to continue operating their money service must apply for a renewal before the expiry date of their existing license.
- However, there are certain cases where an MSO license cannot be renewed:
- If the applicant is an individual, the license ceases to be valid in the case of the death of the applicant.
- If the applicant is a partner, the license ceases to be valid if the partnership is dissolved.
- If the licensee is a corporation, the license ceases to be valid if the corporation is wound up.
For any individual or any business intending to provide a money service in Hong Kong, obtaining an MSO license is crucial. The fact that Hong Kong is one of the major financial centers in Asia and the rest of the globe is the main advantage of getting an MSO license there. In contrast to other licensing systems, the process is really simple and quick. Tetra Consultants has qualified team members that can help you with the application procedure of attaining a Hong Kong Money Service Operator (MSO) License.
Contact us now to know more about how to register company in Hongkong and attain MSO license in Hong Kong. Our team of experts will revert within the next 24 hours.