MSO License in Hong Kong

A Money Service Operator or MSO License in Hong Kong is issued by the Customs and Excise Department. The MSO License is issued under the provisions prescribed by the Anti-Money Laundering and Counter-Terrorist Financing Ordinance of Hong Kong.

It authorizes a person to remit funds or change currencies under the provisions of the MSO License in Hong Kong. The remittance services can also include sending money to any country or receiving funds in Hong Kong.

Any person who wishes to operate or operates a money service, he/she is required to apply for an MSO License in Hong Kong. The process of obtaining an MSO License in Hong Kong is present below.

What is a Money Service in Hong Kong?

In Hong Kong, Money Service includes money changing service and remittance service. To operate any money service in Hong Kong without a license is an offense.

Money changing service means a service for the exchange of currencies that are operating as a business in Hong Kong. Money-changing service does not include those services that are incidental to the primary business of the person.

Remittance service in Hong Kong means a service of one or more of the following that is operated as a business in Hong Kong:

• Sending, or arranging for sending off, money to any place outside Hong Kong;
• Receiving, or arranging for receipt of, money from any place outside Hong Kong; and
• Arranging for receipt of money in any place outside Hong Kong.

An individual should only operate a Money Service after being granted a license by the Customs and Excise Department of Hong Kong. Normally, the MSO License in Hong Kong has a validity period of 2 years. Hence the licensee can also apply for the renewal of MSO License. Such a renewal should be applied before the expiration to continue its operation of the Money Service.

An applicant for an MSO License can be a Hong Kong unlimited company, Hong Kong limited company or overseas company.

What are the benefits of obtaining an MSO License in Hong Kong?

The benefits of obtaining an MSO License in Hong Kong are as follows:

• Hongkong is one of the leading business centers in Asia;
• There is a possibility to provide types of financial services as currency exchange and money transfers;
• There is also an opportunity to buy an already existing MSO License in Hong Kong; and
• The procedure of obtaining an MSO License is relatively fast.

Who is eligible to obtain a license?

Under Section 30(3) of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance or AMLO, the Commissioner of Customs and Excise or CCE can grant or renew an MSO License in Hong Kong to any applicant to operate a money service only if the Commissioner of Customs and Excise or CCE is satisfied with certain conditions.

The conditions are as follows:

• In the case where the applicant is an individual, the individual and each ultimate owner is required to be a fit and proper person to operate a money service;
• In the case where the applicant is a partnership, each partner and each ultimate owner in the partnership is required to be a fit and proper person for operating a money service; or
• In the case where the applicant is a corporation, each director and each ultimate owner of the corporation is required to be a fit and proper person to be connected with the business of operating a money service.

What is the procedure for Obtaining an MSO License in Hong Kong?

The procedure for obtaining an MSO License in Hong Kong is as follows:

Complete Application Form

• An applicant is required to complete an application form as prescribed in Form 1.

Complete Relevant Annexures

• Then the applicant is required to complete the relevant annexures as prescribed by the laws.

Submission of necessary papers

• Submission of the required necessary papers which are as follows:

1) Business Plans; and

2) CFT/AML Policies.

• The applicant can complete the form and annex in either English or Chinese language, or both if the case requires. Further, the applicant is required to fill in all the parts in the form and annex, which is applicable to the applicant.

Application sent to Customs and Excise Department

• The applicant is required to submit the completed form and annex to the Customs and Excise Department of Hong Kong.
• The application should be accompanied by the photocopies of the requisite necessary papers, Business Plan, and AML/CFT Policy.
• The application for an MSO License can be sent by post or in-person to the Money Service Supervision Bureau, at the Customs and Excise Department in Hong Kong.
• The application form, annex, and guidelines for the submission of the Business Plan and AML Policy can be obtained from the address of the Money Service Supervision Bureau or can be downloaded from the website of Customs and Excise Department website.
• For a new application to operate a money service at a particular premise, the application form is required to be attached with at least 2 photographs. One photograph should clearly show the business premises, such as the counter or office of the particular premises. The second photograph should show the outer part of the business premises, such as the signboard.
• In case of a failure to submit the required photographs, the application will be deemed to be an invalid application. Such an invalid application will not be processed by Customs and Excise Department of Hong Kong.

Acknowledgment Receipt of Application

• On receipt of an application for MSO License by the Customs and Excise Department, an applicant will be provided with an acknowledgment receipt of the application.

Notice for any other necessary papers

• A reminder will be issued to the applicant in the provision of any outstanding necessary papers, where necessary.
• In case an applicant fails to provide the requisite information on the application form and annex or produce any required necessary papers, including Business Plan and CFT/AML Policy within a specified time period, the application will be considered invalid. Such an invalid application will not be processed by the Customs and Excise Department of Hong Kong.

Notice of Interview and Payment of Fees

• The applicant will receive a notice for an interview when all the required necessary papers are found to be in proper order.
• This interview notice will be together with a demand note for the payment of fees with regard to the application for the grant of an MSO License in Hong Kong and fit and proper person test.
• The applicant will be required to bring along the notice, payment record, and all the required original necessary papers while attending the interview. The time of the interview with the officers of the department will be allotted accordingly.

Sign Application of MSO License

• During the interview of the applicant by the officers, the original necessary papers and the payment record will be verified.
• After verification, the applicant will be required to sign on the application for an MSO license in the presence of the Custom and Excise Department officers.

The processing time of the application for an MSO License in Hong Kong may vary and depend on the various factors. The factors include the time taken in on‐site inspection at the business premises, collecting requisite necessary papers from the applicant, and the time required in obtaining the records from other authorities to perform a fit and proper person test.

Who can apply for the fit and proper person test for obtaining an MSO License in Hong Kong?

The persons required to apply for the fit and proper test for obtaining an MSO License in Hong Kong are as follows:

• Where the applicant is an individual, the individual, and each ultimate owner;
• Where the applicant is a partnership, each partner in the partnership and each ultimate owner; or
• Where the applicant is a corporation, each director and each ultimate owner of a corporation that is to be associated with the business of operating a money service.

How will a person apply for the fit and proper person test for obtaining an MSO License in Hong Kong?

The applicant of the MSO License in Hong Kong needs to complete a Form of Fit and Proper Person Declaration Form. The form is Form 3A with Appendices I & II for an individual and Form 3B for a corporation. The applicant is required to submit the form together with supporting necessary papers to the Customs and Excise Department in Hong Kong.

With regard to Appendix I, which is to be attached to Form 3A, the declarant is required to sign in the presence of a witness. The witness, in this case, will be an authorized officer of the Customs and Excise Department in Hong Kong, a practicing professional (e.g., solicitor, auditor, accountant), a Justice of Peace, or a notary public.

The witness is required to check the personal particulars, as stated in Appendix I against the original necessary papers of the identity of the declarant. After checking, the witness is required to certify that the personal particulars stated in Appendix I are correct and true. The witness should also certify that the Appendix I is signed by the declarant in his/her presence.

On receipt of a declaration form for a fit and proper person by the declarant, the CCE will undertake a number of checks. These checks are performed to confirm the accuracy of the information provided in the form by the declarant. These checks will include inspection of the details against information held by the department, other government and law administration agencies in the state.

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

Usually, the validity period of an MSO License granted in Hong Kong will be 2 years. The licensee of the MSO License is required to apply for the renewal of the MSO License before the expiry of the applicant wishes to continue operating the money service. There are certain cases where an MSO License ceases to be valid.

What are the consequences of not applying for an MSO License to operate a money service?

As per Section 29(1) of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance or AMLO, a person commits an offense if such a person operates a money service without a license in Hong Kong.

As per Section 29(2) of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance or AMLO, any person who commits an offense under Section 29(1) of AMLO, is liable for a conviction to a fine and imprisonment. The fine is of HK$100,000 and imprisonment for up to 6 months.

What is exempted from obtaining an MSO License in Hong Kong?

The following are the list of the exemptions for securing an MSO License in Hong Kong:

• The Government;
• any Authorized Institution;
• any Licensed Corporation that operates a money service that is ancillary to the corporation’s principal business;
• any Authorized Insurer that operates a money service that is ancillary to the insurer’s principal business;
• any Authorized Insurance Broker that operates a money service that is ancillary to the broker’s principal business;
• any Appointed Insurance Agent that operates a money service that is ancillary to the agent’s principal business;
• any SVF Licensee that operates a money service that is ancillary to the licensee’s principal business; or
• any System Operator or Settlement Institution of a designated retail payment system that operates a money service that is ancillary to the business as a system operator or settlement institution.

The Commissioner of Customs and Excise or CCE in Hong Kong will not accept any application for the grant or renewal of License if an applicant is exempted from the MSO Licensing requirements.

Under what circumstances will the Commissioner of Customs and Excise refuse to grant a license to an applicant for an MSO License in Hong Kong?

The Commissioner of Customs and Excise or CCE may refuse to grant an MSO License on the following situations:

• Any applicant or one or more applicants within the business of the applicant fails to satisfy the fit and proper person test;
• The premises to be used for carrying on the business are not suitable for the operation of a Money Service;
• If the applicant failed to obtain the written consent from every occupant of the domestic premises that are to be used for the operation of the Money Service for any official person to enter for the routine inspection;
• If the applicant of the application for MSO License failed to provide the information of a Local Place for Storage of books and records;
• If the applicant who chooses to function a Money Service without any particular premises fails to provide the information of a Local Management Office;
• If the applicant of the application for MSO License was unable to provide the AML/CFT Policy and Business Plan in accordance with the relevant guidelines provided by the Customs and Excise Department of Hong Kong;
• If the applicant failed to employ a Competent Compliance Officer (CO);
• If the applicant submits an invalid or incomplete application; or
• The applicant is exempted from the MSO Licensing regime by virtue of Section 25 of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance or AMLO.

The refusal of grant of the MSO License in the conditions as mentioned earlier should be informed to the applicant by notice in writing by the Commissioner of Customs and Excise Department of Hong Kong. 

Can an applicant be eligible to file for an appeal against the decision of the Commissioner of Customs and Excise for the refusal to grant an MSO License?

The applicant can file an appeal against the decision of the CCE. The appeal can be filed to Anti‐Money Laundering and Counter‐Terrorist Financing or AMLO Review Tribunal within the time period of 21 days. The time period of 21 days is counted from the receipt of the notice informing the applicant of the refusal of grant of an MSO License in Hong Kong.

What are the obligations of a Licensee after obtaining an MSO License in Hong Kong?

A licensee is authorized to comply with all the applicable provisions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance or AMLO and other guidelines issued by the Commissioner of Customs and Excise in Hong Kong.

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

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

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