Hong Kong’s AML Reforms effective 1st March 2018

With effect from that date, statutory customer due diligence (CDD) and record keeping requirements will be implemented for Hong Kong trust or company service providers (TCSPs), solicitors, accountants and real estate agents.

A licensing regime will also be introduced for TCSPs requiring them to apply for a licence from the Registrar of Companies and satisfy a ‘fit and proper’ test before they can provide trust or company services as a business in Hong Kong.

The Bill also updates the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO) to align it with CDD standards set by the Financial Action Task Force. These changes include;

• beneficial ownership in respect of customers is revised from the existing threshold of ‘not less than 10 percent’ to ‘more than 25 percent’ of a customer;
• flexibility in the measures permitted to be taken for verifying a customer’s identity;
• requiring the recording of basic information for wire transfers by requiring basic information about a recipient and, where applicable, an intermediary institution involved in a wire transfer; and
• financial institutions will now have the flexibility to rely on Hong Kong solicitors, accountants, TCSP licensees as well as other financial institutions (including a foreign financial institution in the same parent group) as intermediaries to carry out CDD measures.

These changes to the AMLO should assist financial institutions in satisfying their CDD requirements. They also align Hong Kong’s CDD requirements with international practice and should be welcomed by the industry.

Should you have any questions please feel free to contact Francis Chew at francisc@zetland.biz.