Money Service Operator License in Hong Kong: Step by Step Procedure

Sakshi Sharda

24 Nov, 2020

Hong Kong is one of the major financial hubs. Any person planning to provide any financial services or incorporate a company in Hong Kong is required to learn about all the variations of the financial sector in the jurisdiction.

A Money Service Operator or MSO License is required to offer money-related services in Hong Kong. The process of applying for a Money Service Operator License in Hong Kong is a simple procedure. The application can be filed either offline or through an online e-platform.

The person applying for an MSO License in Hong Kong is required to follow the guidelines prescribed by the Customs and Excise Department. In this article, we will discuss the step by step procedure obtaining a Money Service Operator License in Hong Kong.

What is a Money Service in Hong Kong?

According to the rules of Hong Kong, a Money Service Operation means a money changing activity and/or money remittance activity.

The money changing services includes the exchange of currencies that are being operated in Hong Kong as the primary business.

The money remittance services mean one or more of the following:

• Remitting money to any location outside Hong Kong;
• receiving and/or arranging for the receipt of money from any location outside Hong Kong; and
• Arranging for the receipt of money in any location outside Hong Kong.

The notion ‘money’ here includes money in any currency and form, including cheques and travelers’ cheques. Cryptocurrencies are not a means of legal payment, and neither is considered as a currency in Hong Kong. The Money Service Operator License is granted by the Customs and Excise Department of Hong Kong. The applicant for a Money Service Operator License in Hong Kong Could is an overseas company, a limited company in Hong Kong, or an unlimited company in Hong Kong.

What is the procedure of obtaining a Money Service Operator License in Hong Kong?

The procedure of obtaining a Money Service Operator License in Hong Kong is as follows:

Completion of Application Form

• The application form, as prescribed in Form 1^[1], is required to be completed by the applicant.

Completion of Relevant Annexures

• After completing the application form in Form 1, the applicant is required to complete all the relevant annexures as prescribed by the laws and rules.

Submission of the Documents

• There should be the submission of the required documents with the Customs and Excise Department.
• The essential documents are as follows:
  • The Business Plans; and
  • The CFT/AML Policies.
• The applicant has the opportunity to complete the form and annexure in either English or Chinese language or both in case there is a requirement for the same. Further, the applicant is required to completely fill in all the parts in the form and annexure, which is applicable.

Sending Application to Customs and Excise Department

• The applicant is required to submit the completed form and annexure to the Customs and Excise Department in Hong Kong.
• The application should be attached with the photocopies of the required documents, Business Plans, and AML/CFT Policy.
• The application for a Money Service Operator License can be sent in-person or by post to the Money Service Supervision Bureau, at the Hong Kong’s Customs and Excise Department.
• The application form, annexure, and the related guidelines for the submission of the Business Plan and AML Policy can be obtained from the official address of the Money Service Supervision Bureau or can also be downloaded from the official website of Customs and Excise Department^[2].

Application Acknowledgment Receipt

• On the receipt of an application for a Money Service Operator Licence by the Department of Customs and Excise, the applicant will be provided with a receipt of acknowledgment.

Notice for other Documents

• The applicant will be issued a reminder for the provision of any outstanding documents, where ever necessary.
• In case the applicant fails to provide the required information on the application form and the annexure, including the CFT/AML Policy and Business Plan within the specified period of time, the application will be considered invalid. Such an invalid application will not be processed by Hong Kong’s Customs and Excise Department.

Notice of Interview and Payment of Fees

• The applicant will receive an interview notice when all the requisite documents are found to be in order.
• With the notice, a slip will be attached for payment of requisite fee for the Money Service Operator Licence in Hong Kong. The applicant also has to furnish information related to the fit and proper person test.
• The applicant should bring original documents for attending the interview. The time of the interview of the applicant with the officers of the Customs and Excise department will be allotted to the applicant.

Signing of Application for License

• The original documents will be verified by the officers of the Customs and Excise department.
• After verification, the applicant should sign on the application for a Money Service Operator License in Hong Kong in the presence of the officers of the Custom and Excise Department. 

The processing time of the application for a Money Service Operator License in Hong Kong may depend and vary on the various factors. These factors include the time taken in doing the on‐site inspection at the premises of the business, collection of the requisite documents from the applicant, and the time period required to obtain the records from other authorities to perform the fit and proper person test of the applicants.

A separate procedure is prescribed for conducting a fit and proper test of the eligible applicants for obtaining a Money Service Operator in Hongkong. The applicant has to follow prescribed rules and regulations for the fit and proper test to obtain the Money Service Operator License in Hong Kong.

What are the essential documents for obtaining a Money Service Operator License in Hong Kong?

The essential documents for obtaining a Money Service Operator License in Hong Kong are as follows:

• All the supporting documents of the particulars of the applicant, such as the registration certificate of the business and certificate of incorporation;
• All the supporting documents of the particulars of each premises, such as the floor plan and tenancy agreement;
• All the supporting documents of the particulars of the individual partner, owners or director of the business of the applicant, known as the Fit and Proper Person Declaration Forms;
• An authorization letter signed by all the Board of Directors or partners authorizing the application.

In addition to the above mentioned four main types of supporting documents, the applicant for Money Service Operator License may be asked to submit certain other supporting evidence. These additional documents are not listed on the application form for Money Service Operator License. Such documents include a business plan or a CFT/AML Policy.

What are the obligations of the licensee after obtaining a Money Service Operator License in Hong Kong?

The obligations of licensee after obtaining a Money Service Operator License in Hongkong are as follows:

A licensee of the Money Service Operator License is authorized to comply with all the prescribed provisions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance or AMLO and all other rules issued by the Commissioner of Customs and Excise or CCE of Hong Kong.

A non-exhaustive list of the primary obligations of the licensee is as follows:

• A licensee is required to report on any suspicious transactions;
• A licensee is required to maintain and develop an effective CFT/AML Policy to decrease the Money Laundering and Terrorist Financing risks;
• The individual, director, partner or  owner in relation to the licensee should satisfy the criteria for the proper and fit requirements;
• A licensee should secure the consent in writing of all the occupants of the premises that are the domestic premises for the official person to conduct the routine inspection;
• A licensee who is licensed to operate a Money Service Operator in Hong Kong at the premises specified in the Money Service Operator Licence is required to display the exact and original form of the Money Service Operator Licence in a noticeable place at the premises specified;
• A licensee is required to maintain an LPS or Local Place for Storage of books and records;
• Where a licensee functions a money service in Hong Kong without any specified particular premises, the licensee of the Money Service Operator should maintain an LMO or Local Management Office. The licensee should ensure that the LMO or Local Management Office is able to serve as a point of contact for interfacing with the Hong Kong’s Customs and Excise Department;
• A licensee should submit the periodic return to the CCE or Commissioner of Customs and Excise in a prescribed manner timely; and
• Where any bank account is opened to be used for the operation of the money service business, such an opened bank account is required to be in the company’s name of the partner, licensee, the sole proprietor, director, or ultimate owner of the business.

Our Recommendation: How to Open a Bank Account in Hong Kong

What is the validity period of a granted MSO Licence in Hong Kong?

Generally, the time period of validity of a Money Service Operator Licence granted in Hong Kong is 2 years. The licensee of the Money Service Operator License is required to apply for the license renewal before the expiry. Such a renewal should be done if the applicant wishes to continue further operation of the money service. There are certain cases where a Money Service Operator License ceases to be valid in Hongkong.

The cases, where a Money Service Operator License ceases to be valid in Hong Kong are as follows:

• In a case where the licensee is an individual, on the death of the individual;
• In a case where the licensee is a partnership, on the dissolution of the partnership; or
• In a case where the licensee is a corporation, on commencement of winding up of Corporation.

Can an appeal against the decision of the Commissioner of Customs and Excise for the refusal to grant a Money Service Operator Licence in Hong Kong?

The applicant for grant of a Money Service Operator License in Hong Kong is eligible to file an appeal against the decision of the Commissioner of Customs and Excise. The appeal can be filed by the applicant to Anti‐Money Laundering and Counter‐Terrorist Financing or AMLO Review Tribunal.

The time period is 21 days to file an appeal with the Review Tribunal. This time period of 21 days to file an appeal is counted from the receipt of the notice informing the applicant of the refusal of grant of a Money Service Operator Licence in Hong Kong.

What are the consequences of not applying for a Money Service Operator Licence in Hong Kong?

Under Section 29(1) of the AMLO or Anti-Money Laundering and Counter-Terrorist Financing Ordinance, it is stated that if any person operates a money service without a license in the territory of Hong Kong, then such person commits an offense.

UnderSection 29(2) of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance or AMLO, it is stated that if any person who commits an offense as indicated in Section 29(1) of the AMLO, such a person is liable for a conviction to imprisonment and a fine. The imprisonment for up to 6 months and fine is of HK$100,000 in the above case.

What are the benefits of obtaining a Money Service Operator License in Hong Kong?

The benefits of obtaining a Money Service Operator License in Hong Kong are as follows:

• Hongkong is one of the principal business centres in Asia;
• There is also a possibility to provide certain types of financial services as money transfers and currency exchange;
• There is also a chance to buy an existing Money Service Operator License in Hong Kong;
• The process of obtaining a Money Service Operator License is relatively fast.

Conclusion