What is the Money Service Operator License in Hong Kong(MSO License)?
A money service operator is also known as an MSO license is required in Hong Kong to conduct the operations of transfer of money and foreign exchange business. If an individual wants to start this business, an application must be made for the money service operator license. Without a proper license, it is an offence to conduct the business of the MSO in Hong Kong.
Overview of Money Service License in Hong Kong
Individuals and businesses that conducted the business of transferring money came under the joint financial intelligence unit (JFIU). However, the JFIU regulated the operation of MSO only till 2002. In 2012, the Anti-Money Laundering and Counter-Terrorism Ordinance (AMLO) came into force, which regulates the activities of the MSO.
With this, the Customs and Excise Department (C& ED) regulates the operations of the money service operator in Hong Kong. Regulation of the MSO is carried out through the AMLO ordinance. A business that wants to start the activities of the MSO has to make an application with the relevant authority.
Regulatory Authority for Money Service Operator License in Hong Kong
The primary regulatory authority for the MSO license in Hong Kong is the Customs and Excise Departments (C &ED). The C & ED enforces their operations through the AMLO. All businesses have to apply to the C & ED for starting the business of an MSO in Hong Kong. The Commissioner of Customs and Excise (CCE) is the authority which accepts and rejects applications for an MSO license in Hong Kong.
Eligibility Criteria for Money Service Operator in Hong Kong
As per section 30(3) of the Anti-Money Laundering Ordinance, the Commissioner of Customs and Excise will grant the MSO license if the applicant fulfils the following eligibility criteria:
The applicant has to satisfy the above criteria for an MSO license in Hong Kong.
The applicant must satisfy that they are the ultimate owner of the MSO business. The ultimate owner test would apply to all forms of entities:
If the applicant is an individual, then he must satisfy the ultimate ownership test. Apart from this, the individual must also satisfy the fit and proper person test.
- Partnership Firm
If the applicant is a partnership firm, then all the partners must satisfy the criteria that they are fit and proper to manage the activities of an MSO business.
If the applicant is a corporation, then the directors and the key management executives have to show that they satisfy the fit and proper person test.
The ultimate owner of the business means a person or applicant who has the following:
- Major control of the business.
- For a partnership or company, the ultimate owner has to have more than 25% of the partnership or company share capital or profits.
- In a partnership or company, the management has ultimate control of the MSO business.
Fit and Proper Person under the MSO means an individual or the applicant who has no penalties. This will also include any form of criminal convictions against the person or the applicant. In the case of a corporation or a partnership concern, there must be no criminal convictions against the business directors and executives. An applicant applying for an MSO license must not have any drug or terrorist links.
Fit and proper person test for an applicant outside Hong Kong will include an applicant who does not have any form of money laundering charges against him. The applicant for a money service operation license should not be considered bankrupt or adjudged as insolvent.
The place of operation is considered as the premises of an MSO. The commercial premises must be registered with the relevant authority for conducting the Money Service Operator business. The following have to be considered for an MSO:
- The activities conducted in the business premises must be primarily classified for MSO licenses.
- There have to be proper boards for advertisement on the premises. The advertisement board must be kept in a place that can be seen by the customers.
- Control has to be present on the premises by the licensee.
The following cannot be considered as premises for money service operator license:
- Solicitor firms and Accountants (processing documentation).
- Door Service( Where there is no form of physical office space).
- Meeting customers at the customer’s residence or establishment.
- Use of Smart Phones to conduct MSO transactions.
- Residential Buildings cannot be used as an office for an MSO.
If the applicant has no premises, then the applicant must provide information regarding the local management office (LMO). Along with this, the applicant also has to provide information on storing records. However, if part of the premises is used for residential purposes and part is used for commercial purposes, then the commercial premises can still be used as MSO business premises.
The applicant must also appoint a competent CO to manage the business of an MSO. The CO must make sure that compliance is maintained under the AMLO. The applicant must make sure that the CO is an employee. However, the following officers of the applicant would be considered as CO:
- Sole Proprietors.
- Partners of a Company.
Business Registration Certificate
As per the Business Registration Ordinance in Hong Kong, the applicant must make sure to secure a business registration certificate for the business of carrying out activities of the Money Service Operator. The certificate must be issued by the commissioner of Inland Revenue of Hong Kong. Without this certificate, the CCE will not provide the license for an MSO.
Procedure for Money Service Operator License in Hong Kong
The application form must be provided with the following information
- Information on the business plan for the MSO License; and
- Submit information on the Anti Money Laundering Compliance Policy.
- The business plan must have the appropriate details of the MSO business. This will be the management details, payment structures, number of employees, goals, and objectives of the money service operator business.
- The Anti- Money Laundering Policy of the Applicant must show that there are sufficient systems to ensure that there is no form of AML or terrorist financing taking place in the business. The MSO business must draw a structure to show that the business has taken effective steps to mitigate apparent risks present in financing activities.
- The application can be completed either in English or Chinese. It is also possible to fill the application form in both languages.
- Once the form is completed, it must be submitted to the C & ED. Along with these relevant copies of specific documents have to be submitted to the C & ED.
The application form must be submitted either in person or through a postal form to the following address:
Money Supervision Service Bureau
C&ED, Units 1218‐1222, 12/F.,
Nan Fung Commercial Centre, 19 Lam Lok Street,
Kowloon Bay, Kowloon.
- For any new application, two photographs must be attached. The photographs for the application form must correspond to the size. (102 x 152 mm) i.e., 4 R size. One photograph should show the interiors of the business premises. Whereas the other photograph must show the outside premises of the business.
- If the applicant does not have premises for the MSO, then separate photographs must be submitted with the LMO application.
- The application can either be submitted offline or through an online mode. In the online mode, the applicant can use the following link ( https://eservices.customs.gov.hk/MSOS/), to submit the form. However, the applicant has to submit the annexure and other requirements either through post or in person.
- Once the application is received, it will be processed by the C & ED. If the applicant has applied without necessary documents, then the C & ED authority will consider the application invalid and not process it further.
- If all the documents are submitted, the applicant will be invited to attend an interview for the Money Service Operator License. Along with the interview invite, the applicant would be asked to pay a fee for fulfilling the fit and proper person test criteria.
- When attending the interview, the applicant will have to bring the payment receipt along with necessary documents, such as the application form. In the interview, the documents will be verified and processed by the MSO officers.
- The time for processing the application for a money service operator license will depend on many criteria. This will include the time taken for processing the application and documents that are submitted with the application.
- If the C & ED feel that the applicant has fulfilled the eligibility criteria, they will grant an MSO license application.
Renewal of MSO License
The applicant has to renew the license within 90 days of the expiry of the MSO license certificate. However, this must not be made 45 days before the expiry of the license. The MSO license is valid for two years. The license for the MSO business must be submitted in Form- 2. Along with this, supporting documentation must be provided for the MSO license.
Documents required for MSO License in Hong Kong
The following documents are required for Money Service Operator License in Hong Kong:
- Form-1 – MSO license application form.
- Form-2 – MSO license renewal form.
- Business Plan of the Applicant.
- AML policy.
- Photocopies of the Business Premises- Outside and Inside Pictures.
- Relevant Annexures.
- Fit and Proper Person Declaration Form (Form 3A with Appendices I & II for individual and Form 3B for the corporation).
- Form-4 (Where the licensee is the proposed director of the MSO license).
- Form-5 ( In case another premises has to be added as a place for MSO business activities).
- Form- 7 ( In case the applicants wants to provide a notice for cessation of the business).
At Enterslice, we have expert professionals who can assist you in developing your business globally. Our professionals have expert knowledge of Money Service Operator Business in Hong Kong. Using our MSO service will provide you with the following benefits:
- We will assist you in making the offline and online application for Money Service Operator License in Hong Kong.
- We also offer documentation support services.
- We also offer post monitoring compliance service.
- We will liaise on your behalf regarding the MSO application with the Customs and Excise Department (C& ED).