Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022
The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022 (“AMLO”) was passed on 7th December 2022 and will come into force the second quarter of 2023. The AMLO introduces:
- A licensing regime for virtual asset service providers (“VASPs”) which imposes statutory anti-money laundering and counter-terrorist financing (“AML/CTF”) obligations on VASPs in Hong Kong. The VASP regime also ensures adequate investor protection for virtual asset investors.
The VASP regime introduces a rigorous licensing regime on VASP operators under the supervisory power of the Securities and Futures Commission (“SFC”) and criminalises a broad range of crypto-related misconduct, regardless of whether it takes place on a licensed VASP exchange. The regime also provides the SFC with an extensive range of supervisory powers.
- A two-tier registration regime for Dealers in Precious Metals and Stones (“DPMS”), imposing AML/CTF obligations on DPMS sector.
Any person who is seeking to carry on a business of dealing in precious metals and stones in Hong Kong and engage in transactions at or above HK$120,000 (cash or non-cash) is required to register under either Category A or Category B with the Commissioner of Customs and Excise. Registrants engaging in cash transactions at or above HK$120,000 will fall under Category B and be subject to the AML/CTF obligations under Schedule 2 to the AMLO. For dealers who only conduct transactions under HK$120,000, no registration is required.
The AMLO includes miscellaneous amendments to ensure alignment with the latest international standards set by the Financial Action Task Force (FATF). Those amendments include –
- amending the definition of “politically exposed person” (PEP) to align with the FATF requirement;
- facilitating a risk-based approach in determining the degree of customer due diligence (CDD) that former PEPs are subject to;
- supporting the use of technology by clarifying that a recognized digital identification system can be used for the purposes of CDD and satisfying the additional requirements where a customer is not physically present for identification purposes; and
- clarifying that, where a trust is concerned, a beneficial owner includes a trustee of the trust, a beneficiary and a class of beneficiaries of the trust entitled to a vested interest in the trust.
The amended Ordinance, including the registration regime for dealers in precious metals and stones, will take effect on April 1, 2023, and the licensing regime for VASPs as well as other amendments on AML/CTF requirements, will take effect on June 1, 2023. Transitional periods will be provided under the two new regimes to give industries concerned sufficient time to apply for a licence or undergo registration in accordance with the regulatory regimes. Please get in touch to see how we can help ensure your business is compliant with the updated AMLO or assist with any licensing application under the new regime.
How can Apex Group help
- AML Assurance
- Managed Due Diligence
- Green KYC
