New Licensing Regime For Trust and Company Service Providers to Come Into Force on 1st March 2018
On 25 January 2018, the Companies Registry announced that under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (“AMLO“) a new licensing regime for trust and company service providers (“TCSPs“) will come into force on 1 March 2018.
Along with that, a new regime expecting companies to keep and sustain significant controllers registers will also come into force on 1 March 2018, following the passing of the Companies (Amendment) Bill 2017 on 24 January 2018. Check below for complete details.
The New TCSP Licensing Regime
Traditionally, Hong Kong trust companies did not have their own regulatory regime. Only the registration via the Registrar of Companies has claimed about the use of the word “trust” in a company’s name. As part of this complete process, trustees were registered, but not regulated.
Including a licensing regime for trust companies as earlier discussed as part of the public consultation on the evaluation of the Trustee Ordinance (Cap. 29) in 2009-2010, but was eventually not implemented at that time.
Moreover, following the new licensing regime introduced under the AMLO, TCSPs will be obliged to apply for licenses from the Registrar of Companies and provide a “fit-and-proper” test before providing trust or company services to anyone in Hong Kong. TCSPs also have to follow the statutory due diligence and record-keeping requirements under Schedule 2 of AMLO.
So, what’s the power that the Registrar will get?
Under this new regime, the Registrar will have the power to renew, grant, refuse to grant, suspend or revoke a license, and impose or vary any conditions to a license. A TCSP license will be valid for three years. TCSP licensees are expected to get prior approval from the Registrar before anyone becomes a director of the licensee, an ultimate owner, or a partner. Also, within one month of any development or change, TCSPs need to notify the Registrar regarding any changes of other particulars earlier provided in connection with an application for the grant or renewal of a license. A TCSP licensee who expects to terminate to carry on the trust or company service business is also claimed, before the proposed date of cessation, to inform the Registrar of that intention and the expected date of cessation.
After 1 March 2018, any person continuing a trust or company service business in Hong Kong without a license will commit an offense and will be accountable on conviction to a fine up to HK$100,000 and imprisonment up to six months (subject to the transitional arrangements).
With effect from 1 March 2018, a person will be considered to have been granted a license to conduct a trust or company service business if directly before 1 March 2018 it was carrying on a trust or company service business in Hong Kong and has a valid business registration certificate for that purpose. It would be considered as a deemed licensee.
What does the deemed licensee need to do?
During a 120 day transitional period (starting from 1 March 2018 and ending on Friday 29 June 2018), a deemed licensee needs to apply for a license. The deemed license will cease to effect with the expiry of the transitional period. If the deemed licensee applies for a license during the transitional period, the licence will usually cease to effect when the application is granted, rejected or withdrawn or may be at the end of the transitional period.
Implementation of the Licensing Regime
To start the implementation of the new licensing regime, the Companies Registry has provided with a new set up (office), the Registry for Trust and Company Service Providers, i.e., the “Registry,” to regulate the licensing regime and monitor TCSPs. The Registry commenced operation with immediate effect along with a new website that has been set up to provide any additional information related to the new licensing regime.
The Companies Registry has also regulated a circular on the new licensing regime for TCSPs along with the guidelines on the licensing of TCSPs, compliance with AML/CTF obligations for TCSPs and on the intrusion of financial penalties which can be easily accessible from the Companies Registry’s website.
If you have any doubt or questions about the new regime or the forms related to the applications for a TCSP license, fit-and-proper statements, and notifications to the Registry, the FAQ’s section is available on the website for a clearer picture. From 1 March 2018, applicants for TCSP licenses will be able to submit applications electronically on the website.
Significant Controllers Register
Also, the Significant Controllers Register will take effect on 1 March 2018 following the passing of the Companies (Amendment) Bill 2017 on 24 January 2018.
The goal for new license regime
The new regime strives to improve the transparency of beneficial corporate ownership by asking companies incorporated in Hong Kong to achieve and maintain up-to-date beneficial ownership information by keeping a Significant Controllers Register (the Register). The Register needs to be open for inspection by law enforcement officers on demand.
Startupr aims to get a new licensing regime to become a Licensed Company Secretary provider in Hong Kong and provide you all the services uninterrupted.