Hong Kong consults on TCSP licensing and beneficial ownership register

6 January 2017, the Financial Services and Treasury Bureau (FSTB) released for public consultation two proposals dealing with the regulation of designated non-financial businesses and professions (DNFBPs) and enhanced transparency of corporate beneficial ownership.

Under the first proposal, a licensing regime is to be introduced for trust and corporate service providers (TCSPs) and the scope of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) in respect of statutory customer due diligence (CDD) and record-keeping requirements is to be expanded to cover all DNFBPs when engaging in specified transactions.

Under the second proposal, the FSTB intends to amend the Companies Ordinance to require companies incorporated in Hong Kong to obtain and hold up-to-date beneficial ownership information for public inspection upon request. The requirement will apply to all companies incorporated in Hong Kong under the Companies Ordinance, including companies limited by shares, companies limited by guarantee, and unlimited companies.

A beneficial owner in relation to a company will be, for example, an individual who directly or indirectly holds more than 25% of its shares; directly or indirectly holds more than 25% of its voting rights; directly or indirectly holds the right to appoint or remove a majority of its directors; or otherwise has the right to exercise, or is actually exercising, significant influence or control.

For the purpose of keeping accurate and timely beneficial ownership information in accordance with the Financial Action Task Force (FATF) recommendation, the FSTB also proposes that a company will be required to identify and keep a “register of people with significant control” over the company.

Written comments are to be submitted by 5 March to enable implementing legislation before the next mutual evaluation by the FATF in 2018. A government spokesperson said: “The proposals are pertinent to our fulfilment of the relevant FATF obligations. This will safeguard the integrity of Hong Kong as an international financial centre, and add to our credibility as a trusted and competitive place to invest and do business.”