Review Tribunal for the Fight against Money Laundering and the Financing of Terrorism and Assessment of the Competencies of Money Service Operators

The Anti-Money Laundering and Terrorist Financing Ordinance, Chapter 615 of the Laws of Hong Kong, (“AMLO“) (formerly known as the Anti-Money Laundering and Terrorist Financing (Financial Institutions) Ordinance) entered into force on April 1, 2012. It aims to strengthen the fight against money laundering silver (“AMLA“) and counter-financing of terrorism (“CFT») Financial sector regime. It also seeks to better align Hong Kong’s AML / CFT regime with current international standards and helps maintain Hong Kong’s status as an international financial center.

Anti-Money Laundering and Terrorist Financing Review Tribunal

In order to ensure appropriate checks and balances, the Anti-Money Laundering and Terrorist Financing Review Tribunal (“Review tribunal“) is established under the AMLO to examine:

  • specified decisions made under the AMLO by a competent authority, which includes the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission (SFC), the Insurance Authority (IA) and the Customs & Excise Department (“C&DE “);
  • any decision of the Commissioner on licensing matters relating to money service operators (“MSO” ); and
  • any decision of the Registrar of Companies on licensing matters with respect to trust or corporate service providers.

Schedule 4 of the AMLA sets out the provisions relating to the review tribunal, which provide that the chairman of the review tribunal may, after receiving a request for review, order a preliminary conference to be held in order to enable the parties to come together. preparing for the conduct of the review, helping the Review Tribunal decide issues for review and generally ensuring the fair, prompt and economical conduct of the review. A formal review hearing may also be ordered by the court, which can be handled by the chairperson of the review tribunal alone.

The appointment of the chairman and a group of 11 members to the review tribunal was made by the Secretary of Financial Services and the Treasury.

Money service operators

One of the licenses considered by the reviewing court is an MSO license.

the C&DE is the regulatory authority for MSOs, whose powers are conferred by the AMLO.

If a person wishes to operate a monetary service, they must apply for an MSO license from the C&DE. A monetary service means a foreign exchange service, including the exchange of currencies; or a money transfer service, including sending and receiving money to and from a location outside of Hong Kong. A person must maintain an MSO license to operate a monetary service.

Fit and fit person

In accordance with Article 30 (3) of the AMLO, the Commissioner of C&DE (the “Commissioner“) may grant or renew an MSO license only if the Commissioner is satisfied that:

  • Where the requestor is an individual, the individual and each ultimate owner is a suitable and appropriate person to operate a monetary service;
  • Where the applicant is a partnership, each partner and each ultimate owner of the partnership is a suitable and appropriate person to operate a money service; and
  • Where the applicant is a corporation, each director and each ultimate owner of the corporation is a suitable and appropriate person to operate a monetary service.

In determining whether a person is fit and suitable, the Commissioner will take into account a variety of factors, including, but not limited to:

  • If the person has been convicted of any of certain offenses under the AMLO, the United Nations Ordinance (Counter Terrorism Measures), the Drug Trafficking Ordinance (Product Recovery) and the Ordinance on Serious and Organized Crimes;
  • If the person has a conviction in a location outside of Hong Kong for an offense related to money laundering or terrorist financing, or for which it was necessary to find that the person had acted in a fraudulent, corrupt or dishonest manner;
  • If the person has persistently failed to comply with a requirement imposed under the AMLA or any regulation made by the Commissioner under section 51 of the AMLA;
  • If the individual is an undischarged bankrupt or is the subject of bankruptcy proceedings under the Bankruptcy Order;
  • If the company is in liquidation or is the subject of a liquidation order, or if a receiver is appointed in respect of it; and
  • Any other question that the Commissioner considers relevant.

C&DE has published a guideline on the criteria for determining suitability and ownership which gives more details in this regard.

Skills assessment

On March 4, 2021, the C&DE announced that it will start implementing the skills assessment (“Evaluation“) for MSO this year. The assessment aims to ensure that the senior management of the accredited OSM has fundamental knowledge and a clear understanding of AML / CFT), as well as to raise the level of compliance of the industry to preserve the integrity of the AML / CFT regime under AMLO.

All applicants and MSO licensees are required to attend the assessment. The outcome of the assessment is one of the questions the Commissioner considers relevant in determining whether the applicant or licensee is a suitable and appropriate person to operate the money services business.

The evaluation will be implemented in 2 phases:

  • The assessment will be applicable to all MSO licensing applications submitted to the C&DE as of June 1, 2021; and
  • The assessment of MSO license renewal applications will begin in the third quarter of 2021.

C&DE has published a set of Guidance Notes on Competency Assessment for Money Service Operators which provides details on the requirements, format and scope of the assessment. The Licensing Guide is also revised in light of the implementation of the Assessment.

Failure to comply with the requirements of the revised Licensing Guide may result in the application for a new license or license renewal being void. If an MSO license has been granted, the licensee may be subject to license suspension and revocation. Here are other key points from the revised Licensing Guide:

  • The sole proprietor, one of the partners and directors of an applicant or licensee must pass the Assessment conducted by the C&DE.
  • If no member of a candidate’s senior management attends or passes the assessment, the Commissioner may refuse to grant or renew an MSO license.
  • A licensee must ensure that at least one of the senior management has attended the assessment.

Suspension or revocation of license

In accordance with article 34 of the LBA:

  • The Commissioner may suspend or revoke an MSO license if the licensee, or any partner, administrator and ultimate owner in relation to the licensee, is no longer a person fit to operate a monetary service or to be associated with the business of operating a monetary service after the granting of a license.
  • The commissioner will notify the license holder of the license suspension or revocation by written notice.
  • The license holder must be given the opportunity to be heard before the license is suspended or revoked.
  • An MSO license holder whose license is suspended or revoked may appeal the decision of the Commissioner to the Review Tribunal within 21 days of the notice of the decision to suspend or revoke.

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