In order to carry out money services activities, it is necessary to have an MSO (Money Service Operators) license. The issuance of this license is the responsibility of the Customs and Excise Department under the Anti-Money
Laundering and Terrorist Financing Ordinance (AMLO). This Ordinance, which is enforced by the Commissioner of Customs and Excise of Hong Kong (“CCE”), sets standards for business conduct. It is also responsible for regulatory guidance for those not exempt from obtaining this license.
Benefits of the MSO license
The advantages of securing an MSO license in Hong Kong include:
- Hong Kong’s status as a premier Asian business hub.
- The ability to offer financial services like currency exchange and money transfers.
- The option to acquire an existing MSO License.
- A swift process for obtaining the MSO License.
Regulatory Guidelines and Eligibility Criteria for MSO License
The Hong Kong Customs and Excise Department is the key authority for Money service operator license regulation, focusing on Money Service Operators since July 1, 2012. This agency exclusively manages this sector, with a more relaxed approach than the Securities and Futures Commission and the Hong Kong Monetary Authority, which regulate other financial services. Financial entities under these authorities are exempt from the MSO license Hong Kong requirement.
Eligibility for the MSO license, as per AMLO, includes:
- Individuals and their ultimate owners must be recognized as ‘fit and proper’ to run a money service.
- In a business partnership, each partner and the ultimate owner must meet the ‘fit and proper’ criteria.
- For corporations, every director and ultimate owner must qualify as ‘fit and proper’ in relation to the business.
- All applicants are required to submit a ‘fit and proper person’ declaration form.
MSO License Services in Hong Kong
Under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) in Hong Kong, the term “money services” requiring an HK MSO license includes two primary categories:
Money Changing Service:
- This service involves the business of currency exchange within Hong Kong.
- It specifically excludes incidental exchanges, such as those in retail businesses or hotels, mainly for guest convenience.
Remittance Service:
- This service pertains to transferring funds to or from Hong Kong, or arranging for such transfers.
- It encompasses activities like sending money outside Hong Kong, receiving money from abroad, or making arrangements for such transactions.
The scope of these services under AMLO extends to mobile and online operations, adapting to the digital revolution in financial services.
MSO License in Hong Kong and MSB License in Canada
For an MSO license in Hong Kong, companies (local or foreign) must undergo an integrity test, register a business premise for approval, and submit detailed documentation, including an AML policy, with a non-refundable fee. Bankrupt companies or those with criminally-recorded managers are disqualified.
In Canada, securing an MSB License requires a physical office, registration with the financial intelligence unit, adherence to AML/CTF policies, stringent record-keeping, and personnel with clean criminal records. Monitoring transactions and reporting anomalies are also essential.
Requirements and Documentation
Eligibility of the Company:
Both Hong Kong-registered companies (with limited or unlimited liability) and foreign entities are eligible, catering to residents and non-residents alike.
Integrity Assessment:
Companies must clear a specific test designed to weed out unreliable or corrupt individuals.
Premises Registration:
A registered office address is mandatory where meetings, main activities, and promotional efforts occur under the licensee‘s oversight.
The premises selection must receive approval from the Customs and Excise Department representative.
Document Requirements:
- Companies must submit a comprehensive set of documents, including information about the company and its members, office address verification, business plan, and AML policies.
- A non-refundable application fee is payable to the Customs and Excise Department.
- The process involves an interview and a special form for additional information.
Companies with bankruptcy history, rights not reinstated, or managers with criminal records are ineligible.
Steps for Obtaining an MSO License in Hong Kong
To obtain a money service operator license HK, the application process with the Customs involves several steps:
- Submission of the MSO License Application to the Customs.
- Receipt of an acknowledgment from the Customs.
- Notification of an interview and a fee payment request.
- Verification of original documents and payment records during the interview, and signing the formal MSO license application.
- Arrangement of an on-site business premises inspection.
- Background check by the Customs, involving the Hong Kong Police Force and Official Receiver’s Office.
- Final granting of the MSO license by the Customs.
The Hong Kong MSO license typically remains valid for two years, necessitating renewal before expiration for continued operation of money services. However, renewal may not be possible in certain situations:
- For individual applicants, the license becomes invalid upon the applicant’s death.
- For partnerships, the license expires if the partnership dissolves.
- For corporations, the license is void if the corporation is wound up.
FAQ
What is the key difference between a currency exchange service and a remittance service?
A currency exchange service involves the exchange of currencies in Hong Kong, where the exception may be an accidental exchange in a tourist hotel, for example. Remittance services include the transfer of funds to or from Hong Kong, as well as the organization of this process.
Why is it important to obtain an MSO license for a financial services provider?
With an MSO license, you can legally offer money transfer and currency exchange services. It is equally important that this happens in one of the largest business centers in Asia.
Who is exempt from needing an MSO license in Hong Kong?
This applies to those financial institutions that the Securities and Futures Commission or the Hong Kong Monetary Authority already regulates. These include authorized banks, licensed corporations, and approved insurance companies and are generally exempt from obtaining an MSO license.
What are the key steps and documents required to obtain an MSO license in Hong Kong?
Applicants must undergo a background check, register their office premises, and submit a full set of documents, including company and member information, proof of office address, business plan, and anti-money laundering policy. A non-refundable registration fee is also part of the process.
