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Money Service Operator Licence

Updated: Mar 29


Money Service Operator Licence | Bestar
Money Service Operator Licence | Bestar

Licensing for Money Service Operators (MSOs)


This licensing guide is for individuals and corporations who operate or wish to operate money service in Hong Kong. It sets out notes on the licensing requirements under the AMLO and explains the application procedures in details.


This licensing guide applies to an applicant for grant of an MSO licence (applicant).


Hong Kong Customs and Excise Department (C&ED) is the agency that regulates Money Service Operators (MSOs). The relevant powers are set out in Chapter 615 of the Anti-Money Laundering and Counter‐Terrorist Financing Ordinance (AMLO).


If a person operates or wishes to operate a money service, he or she needs to apply for a license. Anyone must apply for a license from the CCE before operating a money service.


What is Money Service


A money service means a currency exchange service or remittance service.


What is a Currency Exchange Service


A currency exchange service means currency exchange service carried on as a business in Hong Kong, but does not include such a service in connection with a principal business, such as a retail business that accepts foreign currency in transactions or a retail business run by a hotel manager, if the service


  1. operate on hotel premises primarily for the convenience of hotel guests; and

  2. only include transactions in which the person purchases non-Hong Kong currency in exchange for Hong Kong dollars.


What is a Remittance Service


Remittance service means one or more of the following services carried on as a business in Hong Kong—


  1. sending or arranging to send money outside Hong Kong;

  2. receiving or arranging to receive money from a place outside Hong Kong;

  3. arranging for payment to be received outside Hong Kong.


Licensing Exemptions


According to the AMLO, MSO licensing requirements do not apply to government nor to:


(a) an authorized institution;

(b) a licensed corporation that operates a money service ancillary to the principal business of the corporation;

(c) an authorized insurer who carries on a money service incidental to the insurer's principal business;

(d) an authorized insurance broker that operates money services in connection with the principal business of the broker;

(e) an appointed insurance agent who operates money services incidental to the principal business of the agent;

(f) an SVF licensee who operates a money service that is incidental to the licensee's principal business; or

(g) a system operator or settlement institution of a designated retail payment system that operates money services that are ancillary to its business as a system operator or settlement institution.


CCE will not accept any application to grant a license if the applicant has been exempted from the MSO license requirement.


Eligibility for a License


Pursuant to section 30(3) of the AMLO, the CCE may issue or renew a license to operate a money service to an applicant only if the CCE is satisfied that—


(a) if the applicant is an individual, the individual and each ultimate owner is a fit and proper person to operate a money service;


(b) if the applicant is a partnership, each partner and each ultimate owner of the partnership is a fit and proper person to operate a money service; or


(c) If the applicant is a corporation, every director and every ultimate owner of the corporation is a fit and proper person in connection with the operation of a money services business.


Ultimate Owner


1. In the case of an applicant for a license or a licensee who is an individual, the ultimate owner means:


  • another person who ultimately owns or controls the money service business of the first-mentioned individual; or

  • if the first-mentioned individual is acting on behalf of another person, that other person.


2. The ultimate owner in relation to a license applicant or licensee as a partnership is an individual who:


  • directly or indirectly owns or controls more than 25% of the partnership capital or profits;

  • is directly or indirectly entitled to exercise or control the exercise of more than 25% of the voting rights of the partnership; or

  • exercises ultimate control over the management of the partnership.


3. The ultimate owner in relation to a license applicant or licensee as a company is an individual who:


  • owns or controls, directly or indirectly, more than 25% of the company's issued share capital, including through trusts or bearer shares;

  • is directly or indirectly entitled to exercise or control the exercise of more than 25% of the voting rights at general meetings of the company; or

  • exercises ultimate control over the management of the company.


Other Requirement for the Applicant of MSO Licence


(a) An applicant is required to appoint a competent CO and an Money Laundering Reporting Officer (MLRO) to act respectively as the focal point for the oversight of applicant’s anti-money laundering and counter-terrorist financing (AML/CFT) systems and compliance measures and the central reference point for reporting suspicious transactions. Except that the sole proprietor, partner, director, or ultimate owner of the applicant is also the CO and MLRO, the CO and MLRO must be the applicant’s employee under the definition of Employment Ordinance, Cap. 57, Laws of Hong Kong. Applicants and licensees may refer to the Guideline on AML/CFT issued by the CCE (AML Guideline) for the requirements of CO and MLRO.


(b) The sole proprietor, any one of the partners and directors of an applicant or a licensee must pass a Competence Assessment (Assessment) conducted by the C&ED with a view to ensuring that the senior management of an applicant or a licensee has clear understanding of ML/TF risks to which it is exposed, and is capable of implementing effective AML/CFT systems to adequately manage and mitigate the ML/TF risks identified in order to meet the statutory AML/CFT obligations. Applicants and licensees may refer to the “Guidance Notes on the Competence Assessment for MSOs” issued by the CCE for further details.


(c) Any person carrying on business in Hong Kong is required to register the business under the Business Registration Ordinance, Cap. 310, Laws of Hong Kong. An applicant or a licensee must have a valid Business Registration Certificate issued by the Commissioner of Inland Revenue, otherwise, the application for a licence will not be processed by C&ED, or if a licence has been granted, the licence will be subject to suspension and/or revocation by the CCE.


Particular Premises Used to Operate a Money Service


The particular premises that require registration are the venues where you operate currency exchange services and/or remittance services. Here are some examples of particular premises that operate a money services business:


  1. the premises are occupied for the operation of a money service;

  2. the premises are advertised (including display of signs) to meet customers there; and

  3. the premises are normally controlled by the licensee, either as landlord or tenant.


However, a premises is not considered a particular premises operating a money service if you are merely a visitor or customer of a establishment such as a dining establishment or a bank, or simply a visitor or customer of an accountant or law firm which handles accounting or legal documents for your company.


Where particular premises are situated in a mixed commercial and residential building (i.e. situated in domestic premises), the applicant has secured the written consent of every occupant of the premises for any authorized person of C&ED to enter the premises to conduct inspection.


During the period of application for the grant of a licence, no separate application is required for additional premises operating money services other than the principal premises. The applicant must include in the license application each additional establishment operating a money service.


Local Management Office


An applicant who chooses to operate a money service without particular premises must maintain a physical presence in Hong Kong, which will be its local management office (LMO) and correspondence address of the business/ corporation. The LMO is a physical office which can be reached in person and through telephone by C&ED officers to perform the functions under the AMLO, as well as receive document/correspondence from C&ED such as circulars and notices to the licensee. Personnel in the LMO must be the sole proprietor, partner, director, ultimate owner and/or Compliance Officer (CO) of the licensee. As such, residential address/premises of an MSO or the address/premises of its service provider (if any), such as company secretarial firm, accounting firm, or solicitor firm, etc. will not be accepted by the CCE as the LMO of an MSO. This is necessary to provide a local office and the personnel of the licensee as a point of contact for interfacing with C&ED for the effective supervision of the licensee’s money service business. In addition, the landlord of the LMO must grant permission to the licensee to use the premises for money service business, which should be included in the tenancy agreement of the LMO or in a letter issued by the landlord to the applicant.


Sharing the Premises with other Business


Where other business is being run on the same premises of an applicant, the money service business of the MSO must be clearly partitioned and distinguished from the other business. Sharing the premises with other MSO to operate money service business will not be accepted by the CCE.


Local Place for Storage of Books and Records


An applicant is required to provide the information of a local place for storage of books and records (LPS) in Hong Kong, which is a physical place for keeping the full set of books and records in respect of its money service transactions. The LPS must be under the control of the licensee so as to facilitate the C&ED officer’s access to them to perform the functions under the AMLO. As such, residential address/premises of an MSO or the address/premises of its service provider (if any), such as company secretarial firm, accounting firm or solicitor firm, etc. will not be accepted by the CCE as the LPS of an MSO. In addition, the landlord of the LPS must grant permission to the MSO to use the premises for money service business, which should be included in the tenancy agreement of the LPS or in a letter issued by the landlord to the applicant.


Application Procedures for a Licence to Operate Money Service


Apply for a Licence


An applicant needs to complete an application form (Form 1), supplementary information sheet and the relevant annex and submit a (i) Business Plan; and (ii) AML/CFT policies (hereafter refers to as “AML Policy”). The applicant may complete the form, supplementary information sheet and annex in either English or Chinese, or both if the case requires, and has to fill in all the parts in the form, supplementary information sheet and annex which is applicable to the applicant.


The completed form, supplementary information sheet and annex must be submitted to the C&ED together with the photocopies of the requisite documents (see the checklist of supporting documents in the application Form) by post or via C&ED’s website or in person to the Money Service Supervision Bureau, C&ED, Units 402-403, 4/F, Centre Parc, 11 Sheung Yuet Road, Kowloon Bay, Kowloon. The application form, annex, supplementary information sheet and guidelines for submission of Business Plan and AML Policy can be obtained from the above address or downloaded from C&ED’s website.


The applicant needs to complete a Fit and Proper Person Declaration Form (Form 3A with Appendices I & II for individual and Form 3B for corporation) and submit the Form together with supporting document to C&ED. Regarding the Appendix I which is attached to Form 3A, the declarant has to sign in the presence of a witness who is an authorized officer of the C&ED, a practicing professional (e.g. solicitor, accountant, auditor), a notary public or a Justice of the Peace. The witness shall check the personal particulars as stated in the Appendix I against the original identity document(s) of the declarant and certify that the personal particulars 15 stated therein are true and correct. The witness shall also certify that this Appendix I is signed by the declarant in his or her presence.


Applicants can submit an application through electronic means. An applicant can access the C&ED’s website and follow the instructions to submit the licence application.


Checklist of Supporting Documents for Application for an MSO Licence


To facilitate the application for grant of an MSO licence, applicant is required to submit the following documents (stamped with the applicant’s company chop) together with the completed application form, i.e. Form 1, annex and supplementary information sheet to the Money Service Supervision Bureau of C&ED.


Checklist for submission of supporting documents for application for an MSO Licence


1. Supporting Documents of the Applicant’s Particulars


Sole proprietorship

 A copy of valid Business Registration Certificate  A copy of Extract of information on the Business Register

Partnership

 A copy of valid Business Registration Certificate  A copy of Extract of information on the Business Register

Local company

 A copy of valid Business Registration Certificate  A copy of Certificate of Incorporation  A copy of the latest Annual Return (Form NAR1) and all documents filed with the Companies Registry after filing of the latest Annual Return  A copy of Incorporation Form - Form NNC1 (for company limited by shares) or Form NNC1G (for company not limited by shares) for new established company  Information of group structure and percentage of shareholdings of each group member  A copy of Memorandum and Articles of Association

Non-Hong Kong company

 A copy of valid Business Registration Certificate  A copy of Certificate of Registration of non-Hong Kong Company  A copy of the latest Annual Return (Form NN3) and all documents filed with the Companies Registry after filing of the latest Annual Return  A copy of Particulars of a non-Hong Kong Company Registered in Hong Kong (Form NN1) for new established company  Information of group structure and percentage of shareholdings of each group member  A copy of Memorandum and Articles of Association

2. Supporting Documents of Particulars of each premises


Premises used for the operation of a Money Service

 A copy of stamped tenancy agreement or record of ownership of the premises  Floor plan of the premises  Two 4R-sized photographs showing the exterior and interior of the premises  A copy of letter issued by the landlord to the applicant permitting the premises to be used for money service business  Copies of consent letters from every occupant of the premises (for mixed commercial and residential premises only)

Local place for storage of books and records

 A copy of stamped tenancy agreement or record of ownership of the premises  Floor plan of the premises  Two 4R-sized photographs showing the exterior and interior of the premises  A copy of letter issued by the landlord to the applicant permitting the premises to be used for local place for storage of books and records

Local management office

 A copy of stamped tenancy agreement or record of ownership of the premises  Floor plan of the premises  Two 4R-sized photographs showing the exterior and interior of the premises  A copy of valid Business Registration Certificate  A copy of letter issued by the landlord to the applicant permitting the premises to be used for local management office

3. Supporting Documents of Particulars of the sole proprietor and each individual partner / director / ultimate owner of the Applicant


Hong Kong resident

 Completed Fit and Proper Person Declaration Form 3A together with Appendices I & II  A copy of Hong Kong Identity Card

Non-Hong Kong resident

 Completed Fit and Proper Person Declaration Form 3A together with Appendices I & II  A copy of the Bio-data page of the Travel Document

4. Supporting Documents of Particulars of each corporate partner / director of the Applicant


Local company

 Completed Fit and Proper Person Declaration Form 3B  A copy of valid Business Registration Certificate  A copy of Certificate of Incorporation  A copy of Memorandum and Articles of Association

Non-Hong Kong company

 Completed Fit and Proper Person Declaration Form 3B  A copy of valid Business Registration Certificate  A copy of Certificate of Registration of non-Hong Kong Company  A copy of Memorandum and Articles of Association

Corporation not registered in Hong Kong

 Completed Fit and Proper Person Declaration Form 3B  A copy of the Certificate of Incorporation or its equivalent certified in accordance with reg. 3 of the Companies (Forms) Regulations, Chapter 32B

5. Authorization letter


Partner

 A copy of the authorization letter signed by all partners

Corporation

 A copy of the authorization letter signed by the Board of Directors

6. Other requisite documents as specified in Licensing Guide



 Business Plan endorsed by sole proprietor / each individual partner / director / ultimate owner  Anti-money laundering and counter-terrorist financing policy endorsed by sole proprietor / each individual partner / director / ultimate owner  A copy of agreement / contract with each local and/or foreign third party involved in the process of money service  A copy of Hong Kong Identity Card of CO and MLRO  A copy of valid employment contracts for CO and MLRO  A copy of residential address proof of CO and MLRO, e.g. utility bills, bank statement, issued within the last three months from the application date  Proof of bank account ownership issued by bank concerned, e.g. a copy of statement of the bank account held by the applicant for money service business  An acknowledgement from bank that the bank account held by the applicant is used for operating money service business


For new application to operate a money service at particular premises, at least two photographs of size 102x152 mm (i.e. 4R‐size) should be attached to the application form. One photograph should show the inner part such as counter or office of the particular premises, whereas another photograph should show the outer part such as signboard of the particular premises. Where an applicant also has separate premises which serve as LPS and/or LMO, at least two photographs should also be attached for each additional LPS and/or LMO. The photograph requirements for LPS and LMO are the same as those applicable to particular premises.


Business Plan and AML Policy


Business Plan should be a comprehensive overview of the business, which includes but not limited to such components as detailed operation mode, organizational structure, payment system, target customer, staffing, and finance of the company. For example, if an applicant intends to operate a money service without using bank account, the applicant is required to provide relevant details as to how its money service business is operated in this circumstance.


AML Policy should set out, among others, the applicant’s own policies, procedures and controls in the relevant operational areas with a view to mitigating the ML/TF risks to which the applicant is exposed and fulfilling the relevant statutory and regulatory requirements. For example, an applicant is required to elaborate the company’s payment/settlement system for remittance transactions, and the company’s mechanism for sanction screening and screening of high-risk customers.


To prepare Business Plan and AML Policy, applicant should follow the Guidelines for Submission of Business Plan and the Guidelines for Submission of AML Policy, which are available on C&ED’s website.


How the Application will be Processed


On receipt of a licence application by C&ED, an applicant will have an acknowledgment receipt of the application. The applicant will receive a notice for an interview together with a demand note for the payment of fees regarding the application for the grant of a licence and fit and proper person test and an invitation letter for nominating the eligible person(s), i.e. sole proprietor, partner(s) or director(s) of the applicant to attend the Assessment. The applicant will be required to bring along the notice, payment record, and the relevant original documents in attending an interview at the allotted time with the officers of the department.


The person attending the interview must be:


(a) the sole proprietor, where the applicant belongs to sole proprietorship;

(b) the partner(s) or staff member(s) of the applicant authorized in writing by every partner, where the applicant belongs to partnership; or

(c) the directors or staff member(s) of the applicant authorized in writing by the board of directors, where the applicant belongs to corporation.


During the interview, the original documents and the payment record will be verified, and the applicant will be required to sign on the application for an MSO licence in the presence of the C&ED officers. Besides, the applicant will be required to clarify and elaborate any information of the submitted documents in relation to the licence application e.g. its Business Plan and AML Policy provided for the application. With a view to ensuring that the applicant can fully understand and fulfil the obligations of an MSO licensee, the applicant will be briefed on the statutory licensing and compliance requirements applicable to MSOs.


An appointment letter for the Assessment will be sent to the applicant. The eligible person(s) nominated for the Assessment must attend the Assessment at the specified date, time and centre. The result of the Assessment will be one of the factors that the CCE considers relevant in determining whether the applicant is fit and proper to operate the business of a money service.


For more details about the Assessment, applicants and licensees may refer to the “Guidance Notes on the Competence Assessment for MSOs”.


Validity Period of the License


Normally, licenses are granted for a period of 2 years.


Application Processing Time


The processing time may vary and depend on various factors including the time taken in collecting requisite documents from the applicant, on‐site inspection at the business premises, the time required in obtaining records from other authorities to perform a fit and proper person test, and the time taken for completing the Assessment.


Licence Application Fee


There is a fee for application for the grant or renewal of a licence (see Fee schedule at section XIV).


The applicant must pay a fee for each additional business premises in which a money service is operated to be registered (see Fee Schedule at section XIV).


Fee Schedule


Item

Fee HK$

Application for the grant of a licence

3,310

plus for each additional business premises

2,220

plus for each person who is subject to the fit and proper person test

860

Application for an approval to become a licensee’s director/ ultimate owner/ partner

860 For each person in relation to whom the application is made


An application fee collected for processing of the application for grant of an MSO licence will not be refunded if the CCE refuses to grant a licence.


No refund will be made for application fee collected irrespective of whether the application is subsequently approved or refused.


You may find more information about licensing related matters at:



How Bestar can Help


Bestar can often be involved in the process related to MSO licenses in Hong Kong. Here's how Bestar might assist:


Financial Requirements:


  • Preparing Financial Documents: The MSO application involves financial statements and business plans. Bestar can help ensure these documents are accurate and meet CCE requirements.

  • Minimum Capital Verification: There might be a minimum capital requirement for MSO applicants. Bestar can assist in verifying you meet this threshold.


General Support:


  • Liaison with Regulators: Bestar might liaise with the CCE on your behalf regarding financial aspects of the application.

  • Understanding Financial Implications: They can help you understand the ongoing financial reporting obligations that come with an MSO license.

  • Legal Expertise: The MSO licensing process likely involves legal aspects beyond accounting. Bestar's partnered lawyer might provide legal advice directly.


Consider using Bestar for financial aspects and consulting a Bestar's partnered lawyer specializing in MSO licensing for legal matters.


Contact Bestar: Reach out to Bestar to inquire about our specific MSO licensing services.


By combining accounting and legal expertise, you can increase your chances of a successful MSO license application in Hong Kong.


You can also make enquiry on licensing related matters to Bestar by the following ways:


(a) By phone at +852 35651861 (during office hours from Monday to Friday except Public Holidays); or

(b) By email to admin@bestar.asia






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