It has been over a year since the Hong Kong Customs and Excise Department (HKCE) updated its licensing requirements for money service operators (MSO). During this time, the HKCE has issued two guidelines, namely (i) the Guidelines for Submission of Business Plan and (ii) the Guidelines for Submission of Anti Money Laundering/Combatting Financing of Terrorism Policy (together, the Guidelines), which form the key documents HKCE will look at when considering MSO applicants. In recent months, we have also seen a pickup of enforcement actions targeting unlicensed money service operators. In the case HKSAR v. Fu Guangmiao [2020] HKCFI 1783, the Court of First Instance stresses that operating a money service without a license is a very serious offence and Hong Kong is under an international obligation to combat money laundering and terrorist activities.

The Guidelines

When applying for an MSO license, the applicant must, among others, submit a Business Plan and a AML/CFT Policy to the Money Service Supervision Bureau (MSSB). The Business Plan is a comprehensive overview of the applicant’s business, which allows the MSSB to understand the applicant's business operations from an anti-money laundering and counter-terrorist financing perspective. The AML/CFT Policy sets out, among others, the applicant's own policies, procedures, and controls which aim to mitigate the money laundering and terrorist financing risks to which the applicant is exposed. The Business Plan, together with the AML/CFT Policy, forms the basis of a MSO license application and demonstrates to the HKCE the licensee's compliance with anti-money laundering obligations under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO).

The Guidelines for Submission of Business Plan provide the minimum items that should be included in the Business Plan, including, among others, the company's history, key executives of senior management, targeted customers, its business operation and delivery channels, details of bank accounts, and details of computerized systems. Under each heading, the applicant must provide information and elaborate in detail how their business will be run. In addition, applicants are required to confirm in writing that it will notify the HKCE within one month if there are changes to the particulars provided. As stated in the Guidelines, the failure to provide such information may delay or hinder the process of the MSO application.

HKSAR v. Fu Guangmiao [2020] HKCFI 1783

The judgment

An "international obligation"

What this means for payment businesses in Hong Kong?