For the sixth year in a row, we've sponsored and supported the Hong Kong Institute of Chartered Secretaries' Annual Corporate and Regulatory Update (ACRU), an annual industry event for company secretarial professionals in Hong Kong. Held in early June, over 1,900 participants including regulators, governance professionals, directors and senior managers attended the online event.
Amongst other key updates on corporate governance, the licensing regime for trust or company service providers (TCSPs) was a key subject of discussion. The Company Registry (CR), the governing body for TCSP licensees in Hong Kong, shed light on the latest requirements and developments of the regime. Read our key takeaways and how this regime is relevant to your business.
Engaging a licensed TCSP is key
Under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), only licensed TCSPs are eligible to carry out trust or company service business in Hong Kong. The TCSP license is a special type of license issued by the CR exclusively for those qualified corporate bodies or individuals after fulfilling the prescribed standard of practice and assessment. The CR indicated that nearly 10% of the applications for TCSP licenses were rejected or withdrawn since its launch. It's therefore in the best interest of businesses to ensure that the TCSPs they engage are properly licensed.
Ongoing due diligence requirements for TCSPs
Governed by the AMLO, the business relationship between TCSPs and their customers has to be continuously monitored. This includes the regular review of ownership structures, monitoring transactions of the customers and identifying transactions that are complex, large and unusual. Under certain circumstances (such as customers not being physically present for identification purposes and other high-risk situations), the AMLO would warrant enhanced due diligence requirements and impose additional measures.
Record-keeping requirements for TCSPs
To ensure TCSPs are meeting the compliance standards, the CR conducts regular site inspections, desktop reviews and face-to-face interviews with the TCSP licensees. Any non-compliant TCSPs would be subject to warnings, disciplinary actions, suspension or revocation, non-renewal of license or (in serious cases) prosecution.
Why the TCSP regime is important to Hong Kong
- The TCSP licensing regime is in line with international requirements as promulgated by the Financial Action Task Force (FATF). This initiative safeguards the integrity of Hong Kong as an international financial centre and adds confidence and credibility for companies doing business in the City
- To protect the good standing and reputation of your company, it's important to engage a licensed, trustworthy partner for the provision of trust or company services to minimise any risks against money laundering
- Check out the TCSP register website to verify and check on the status of your service provider
How we can help
As a global leader in providing professional trust and corporate services, our Hong Kong team was granted a TCSP licence in 2018. Our highly-specialised teams guide companies through every aspect of setting up and running companies, trusts and investment vehicles with extensive knowledge of local rules and regulations in the region. Leveraging our global network and local expertise, we deliver exceptional client services with a view to building long-term relationship. For more information, please contact our team.
Originally published by Intertrust, July 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.