Early Birds for blockchain—Knowing More of Hong Kong TCSP License

“Anyone who carries on trust and company service business in Hong Kong without a license, once sentenced, will commit an offence and be liable on conviction to a fine of 100,000 HKD and imprisonment up to six months.”

On November 2018, HKKS Company Service Ltd. was sentenced as a criminal in the Sha Tin Magistrates’ Courts, Hong Kong. The court fined HKKS a total of 50,000 HKD for the charges. The court also maintained the company disqualified from both trust and company service provider and receiving a Trust or Company Service Provider License (TCSP) for six months.

HKKS Company Service Limited (the Company) was prosecuted by the Companies Registry under sections 53F(1) and (2) of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) for carrying on company service business without a licence. The Company pleaded guilty at Shatin Magistrates’ Courts on 30 October 2018 and was fined a total of $50,000 for the charges. In addition, the court also disqualified the Company from holding a licence for a period of six months.

The new licensing regime for trust or company service providers commenced on 1 March 2018. Under the AMLO, such providers are required to apply for a licence from the Registrar of Companies before they can provide trust or company services as a business in Hong Kong. Any person who carries on a trust or company service business in Hong Kong without a licence commits an offence and is liable on conviction to a fine up to $100,000 and imprisonment up to six months. The ruling helps disseminate a strong message to all that the Companies Registry will rigorously enforce the licensing regime for trust or company service providers.

From above, we can see that a TCSP license has become one of the necessary qualifications for entities providing trust services in Hong Kong. The pair of standardized professionality + licensed business operations is becoming a regulatory trend for Hong Kong firms devoted in trust or company services.

In a previous article, we explained how to be qualified and apply for an MSO license. (Buddies who have not read it, please jump to the tutorial: MSO article’s hyperlink) Today we will explore the application conditions and procedures of the TCSP licensing.

The TCSP is an abbreviation of Trust or Company Service Provider, which means a license that an entity is required to obtain in order to provide trust or company service.

After applying and being approved for a TCSP license, an entity can operate a trust and company service business in Hong Kong. To protect Hong Kong’s financial system and maintain Hong Kong’s reputation as an international financial centre, Hong Kong has carried on international standards against money laundering and terrorist fundraising activities to prevent and detect illegal funds from inbound and outbound flows. Hong Kong is actively involved in international organizations that have combated such activities. The involvements encompass becoming a member of the Financial Action Task Force (FATF) since 1991, and a founding member of the Asia/Pacific Group on Money Laundering since 1997.

Hong Kong has set up a high-level Central Coordinating Committee on Anti-Money Laundering and Counter Financing of Terrorism, which oversees the implementation of policy development and related systems to combat money laundering and terrorist fundraising activities. The Central Coordinating Committee is chaired by the Financial Secretary. Members of the Committee include representatives of relevant government bureaux and departments, financial regulatory agencies, and law enforcement agencies. They all work together to fight against money laundering and terrorist fundraising activities.

The TCSP Registry is in charge of the statutory reporting of the registered companies, companies’ registration, the implementation of the Companies Ordinance (Chapter 622), the implementation of licensing system designed for the trust or company service providers so that TCSP licensees comply with the customer due diligence (CDD) and record-keeping requirements set out in the Anti-Money Laundering and Counter-Terrorist Ordinance (Cap 615).

I.The TCSP application conditions are as follows:

First, the applicant should be an appropriate person: the applicant (or any of its partners/directors/final owners) is required to submit a TCSP Licence Application Form + the Appropriate Candidate Statement + valid business registration certificates. The applicant supplies these documents submitted to the registration office, which will determine whether the applicant complies with the Anti-Money Laundering Ordinance and the provisions listed in the application form. By this, the registration office assesses whether the applicant is an eligible candidate.

II. Exempted Candidates:

The following candidates do not need to enter the assessment process on whether they are suitable candidates. Instead, they are admissible to submit their relevant application form + certification documents directly:

*Government;

*An authorized institution (in accordance with the Banking Ordinance);

*A licensed consortium (provided that the business is affiliated with the principal business of the corporation);

*Accounting professionals (accountants/certified accountants registered under the Professional Accountants Ordinance);

*Legal professionals (lawyers as defined by the Legal Practitioners Ordinance)

III. Notes:

A licence, valid for three years, contains the licensee’s name, the entity’s name and the business address. The licensee shall declare the change to the registration office’s registrar within one month from the date of the following modification:

IV. The Business Requirements:

The licensee must complete the form before the closing date, during which the licensee is obligated to inform the Registrar the intention to suspend business and the date of suspension. Any licensee who refuses to declare without any reasonable excuse commits an offence. Upon conviction, he is liable to a fine of 50, 000.HKD.

V. Continuous Responsibility:

The licensee shall cooperate with the Companies Registry and allow law enforcement officers to conduct inspections. The purpose of inspections conducted by law enforcement officers is to determine whether the licensee has complied with the provisions of the Anti-Money Laundering Ordinance. The inspections include accessing, copying or printing any records or documents relating to the business or transactions performed by the licensee, and making corresponding inquiries regarding such records or documents. Any licensee who fails to allow any law enforcement officer to access such records or documents, answer any questions or produce such records or documents is guilty of an offence. In such a condition, the licensee may be liable to a fine and imprisonment.

To showcase an example, Coinsuper is a licensed company listed on TCSP official website.

To download TCSP Application Form, click on: https://www.tcsp.cr.gov.hk/tcspls/portal/form

The office address to receive licensing requests: Rm 1208, F 12, One Kowloon, 1 Wang Yuen Street, Kowloon Bay, Hong Kong.

Well, so much for today’s TCSP introduction!

Coinsuper, as the largest officially registered virtual-asset management company in Hong Kong, has acquired not only MSO license but also ML (Money Lender) Creditor License and TCSP Trust License. To know more about Hong Kong financial policies and regulations, don’t hesitate to subscribe the following official account:

Warning: All the author’s articles are for reference only and do not constitute any investment suggestion or strategy. It is advisable for investors to conduct in-depth researches on the target projects before making any investment decisions on behalf of investors themselves.

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