Registration for Dealers in Precious Metals and Stones
- a22162
- Sep 2, 2023
- 8 min read
Updated: Sep 6
Dealer in Precious Metals and Stones
A dealer in precious metals and stones is an individual or entity that buys or sells precious metals, precious stones or jewelry, in the course of its business activities. They may also offer services such as appraisal, cleaning, and repair.
Articles Covered in the Regulatory Regime
The articles covered in the regulatory regime for the registration of dealers in precious metals and stones in Hong Kong are:
Precious metals: gold, silver, platinum, iridium, osmium, palladium, rhodium or ruthenium, in a manufactured or unmanufactured state;
Precious stones: diamond, sapphire, ruby, emerald, jade or pearl, whether natural or otherwise;
Precious product: any product that is composed of, or contains, precious metals or precious stones; and
Precious-asset-backed instrument: any instrument that is backed by precious metals or precious stones.
Registration for Dealers in Precious Metals and Stones
The registration for dealers in precious metals and stones in Hong Kong is handled by the Customs and Excise Department (C&ED). The registration regime came into effect on April 1, 2023.
To become a dealer in precious metals and stones in Hong Kong, you must be registered with the Customs and Excise Department (C&ED).
Two Categories of Registration
There are two categories of registration for dealers in precious metals and stones in Hong Kong:
Category A: Dealers who intend to engage in non-cash transaction(s) with total value at or above HKD120,000 in the course of business are required to register as a Category A registrant.
Category B: Dealers who do not meet the criteria for Category A registration, but who engage in any transaction(s) (whether making or receiving a payment) with total value at or above HKD120,0001 in Hong Kong are required to register as a Category B registrant.
The main difference between the two categories is that Category B registrants are subject to a fit-and-proper test, while Category A registrants are not. The fit-and-proper test is a process to assess whether a person is suitable to be a dealer in precious metals and stones. It considers factors such as the person's character, reputation, and financial standing.
To register, you will need to submit an application form and the required documentation to the C&ED. The application form can be found on the C&ED website. The required documentation includes:
A copy of your valid business registration certificate or hawker licence.
A copy of your valid passport or identity card.
Details on all business premises.
A completed fit-and-proper test form (for Category B registrants only).
A copy of AML/CFT (Anti-Money Laundering/Counter-Financing of Terrorism) Policy and Procedures Manual (for Category B registrants only).
Once you are registered, you will be subject to the C&ED's regulations on the dealers in precious metals and stones. These regulations aim to prevent money laundering and terrorist financing.
The regulatory regime aims to prevent money laundering and terrorist financing by requiring dealers in precious metals and stones to register with the Customs and Excise Department (C&ED) and comply with certain requirements, such as:
Conducting customer due diligence (CDD) on their customers;
Keeping records of their transactions; and
Reporting suspicious transactions to the C&ED.
The registration regime applies to all dealers in precious metals and stones in Hong Kong, regardless of their size or location.
Here are some of the specific requirements that dealers in precious metals and stones in Hong Kong must comply with under the regulatory regime:
Customer due diligence (CDD): Dealers must conduct CDD on their customers to ensure that they are not involved in money laundering or terrorist financing. This includes collecting information such as the customer's identity, address, and source of funds.
Recordkeeping: Dealers must keep records of their transactions for a period of five years. This includes information such as the customer's name, address, and identification number, the type and value of the transaction, and the date and time of the transaction.
Suspicious transaction reporting: Dealers must report any suspicious transactions to the C&ED. This includes transactions that are unusual or appear to be linked to money laundering or terrorist financing.
The C&ED may inspect the records of dealers in precious metals and stones to ensure that they are complying with the regulatory regime. The C&ED may also take enforcement action against dealers who are not complying with the regime, such as issuing a warning, imposing a fine, or revoking the dealer's registration.
The Category A registration would remain valid as long as the registrant continues to stay in business and pay the annual fee.
The Category B certificate of registration is valid for three years in general and renewal application must be submitted at least 60 days before the registration is due to expire.
Registration Fee
The registration fees for the two categories are also different. The registration fee for Category A registration is HKD260. The registration fee for Category B registration is HKD1,970 plus HKD650 for each person who is subject to the fit and proper person test.
If you are interested in becoming a dealer in precious metals and stones in Hong Kong, you should contact Bestar for more information.
Bestar Professional Services
Our rates for professional services assisting with the application process, AML policy development, and compliance for Dealers in Precious Metals and Stones (DPMS) in Hong Kong can vary significantly. Unlike the fixed government registration fees, Bestar costs are not standardized and depend on several factors, including the scope of work, and the complexity of the client's business.
Factors Influencing Fees
Scope of Services: Our fee will depend on the level of assistance required. A basic package only includes help with filling out the registration forms, while a comprehensive service would involve:
Developing a complete AML/CFT (Anti-Money Laundering/Counter-Financing of Terrorism) policy tailored to the business model.
Conducting risk assessments.
Setting up customer due diligence (CDD) and record-keeping systems.
Providing staff training.
Ongoing compliance support and regular audits.
Business Complexity: Our fees will be higher for businesses with a more complex structure, such as those with multiple beneficial owners, international operations, or a wide range of products. Category B registrants, who handle large cash transactions, require more rigorous AML controls, leading to higher professional fees.
Fee Structures
Bestar uses one of the following billing models:
Fixed Fee: A lump sum is charged for a clearly defined project, such as preparing and submitting the registration application. This provides cost certainty for the client.
Hourly Rate: This model is often used for ongoing advisory or complex projects with an undefined scope. Bestar in Hong Kong may charge hourly rates that can range from a few hundred to several thousand Hong Kong dollars per hour, depending on the seniority and expertise of our professional.
Retainer Fee: A recurring fee for ongoing services, such as monthly compliance checks or a set number of consultation hours. This is common for businesses seeking continuous support to ensure they remain compliant with the evolving regulations.
When a business seeks professional assistance for the Dealers in Precious Metals and Stones (DPMS) registration in Hong Kong, they are looking for expertise in two key areas: the administrative application process and the development of a robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) compliance framework.
Our rates for these services are not fixed and can vary widely. Here is a proposal for typical fee ranges, broken down by the scope of work.
1. Registration Application Assistance
This service is for businesses that need help with the bureaucratic side of the application.
Service Scope:
Reviewing the client's business model to determine the correct registration category (Category A or B).
Assisting with the completion of the application forms.
Advising on and collating the necessary supporting documents (e.g., Business Registration Certificate).
Submitting the application to the Hong Kong Customs and Excise Department (C&ED).
Fee Structure:
This is a fixed, one-off fee per application.
Range: HK$5,000 − HK$15,000. For complex cases involving multiple individuals subject to the "fit and proper person" test, our fee could be on the higher end.
2. AML/CTF Policy Development & Compliance
This is a more complex and high-value service, particularly for Category B registrants, who are subject to statutory AML/CTF obligations. The fees for this are significantly higher due to the specialized legal and compliance expertise required.
Service Scope:
AML Risk Assessment: Identifying and assessing the money laundering and terrorist financing risks specific to the client's business model, customer base, products, and geographical exposure.
Policy and Procedures Manual: Drafting a comprehensive AML/CTF policy and procedures manual tailored to the business. This document is a core requirement and must cover:
Customer Due Diligence (CDD) procedures.
Transaction monitoring.
Suspicious transaction reporting (STR).
Record-keeping policies.
Internal controls and staff training.
Compliance Framework Implementation: Assisting the client in implementing the policies, including setting up systems for customer onboarding and ongoing monitoring.
Staff Training: Providing training sessions for staff on their AML/CTF obligations.
Fee Structure:
This is a project-based fee due to the defined scope.
Range: HK$30,000 − HK$100,000+. The fee will be highly dependent on the complexity of the business and the level of detail required in the policy manual. A large-scale dealer with international operations would be on the top end of this range.
For ongoing compliance support, a monthly retainer fee is common. This could range from HK$5,000 to HK$20,000+ per month, depending on the volume of transactions and the scope of monitoring and reporting required.
3. Combined Package (Registration + Compliance)
Bestar offers a bundled package for new businesses to handle both the registration and the compliance framework development.
Service Scope: Includes all the services mentioned above.
Fee Structure: A single fixed fee for the entire engagement.
Range: HK$40,000 − HK$120,000+. This is often a more cost-effective option than hiring separate providers for each task.
In summary, a business should expect to pay a one-time fee for professional assistance with the application itself. If the business plans to engage in cash transactions of HK$120,000 or more (Category B), the much larger cost will be for developing and implementing a robust, tailored AML compliance framework.
How Bestar can Help
Bestar is a financial services firm that specializes in providing accounting, tax, and business advisory services to businesses in Hong Kong. We can help you with the registration for dealers in precious metals and stones in Hong Kong by providing the following services:
Accounting services: Bestar can help you set up your accounting system and ensure that you are compliant with the accounting regulations in Hong Kong. We can also help you prepare your financial statements and tax returns.
Tax services: Bestar can help you understand the tax implications of registering as a dealer in precious metals and stones in Hong Kong. We can also help you prepare your tax returns and minimize your tax liability.
Business advisory services: Bestar can provide you with general business advice, such as how to manage your finances. We can also help you develop a business plan and secure financing.
If you are interested in registering as a dealer in precious metals and stones in Hong Kong, contact Bestar for more information.
Here are some of the benefits of using Bestar to help you with the registration for dealers in precious metals and stones in Hong Kong:
Expertise: Bestar has extensive experience in providing accounting, tax, and business advisory services to businesses in Hong Kong. We have a team of experts who are familiar with the regulatory requirements and the local market.
Convenience: Bestar can help you with the entire registration process, from start to finish. This can save you time and hassle.
Peace of mind: Knowing that you are getting professional help can give you peace of mind and help you avoid mistakes.
Contact us if you have other questions.
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