A presentation on the FATF’s Mutual Evaluation on Hong Kong, China. An Experience to Share

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公 司 註 冊 處
COMPANIES REGISTRY
Ms Kitty Tsui
Registry Solicitor
Companies Registry, Hong Kong
9.4.2019
The FATF’s Mutual Evaluation on
Hong Kong, China
An Experience to Share

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公 司 註 冊 處
COMPANIES REGISTRY
Introduction
 The Financial Action Task Force (“FATF”)
 Mutual Evaluation on Hong Kong, China
 Role of the Companies Registry in the Mutual Evaluation

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公 司 註 冊 處
COMPANIES REGISTRY
The FATF (1)
 An inter-governmental body established in 1989
 A policy-making body – works to generate the necessary political
will to bring about national legislative and regulatory reforms in
combating money laundering, terrorist financing and other
related threats to the integrity of the international financial
system

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公 司 註 冊 處
COMPANIES REGISTRY
The FATF (2)
 Develops a series of Recommendations – recognised as the
international standard for combating money laundering,
terrorist financing and proliferation of weapons of mass
destruction
 Conducts mutual evaluations – peer reviews of each member on
an ongoing basis to assess levels of implementation of the FATF
Recommendations

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公 司 註 冊 處
COMPANIES REGISTRY
The FATF (3)
 Conducting a fourth round of mutual evaluations for its
members based on –
• FATF Recommendations (2012)*
• Methodology for Assessing Compliance with the FATF
Recommendations and the Effectiveness of AML/CFT
Systems (2013)*
* as amended from time to time
• Procedures for the FATF Fourth Round of AML/CFT Mutual
Evaluations (updated June 2018)

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公 司 註 冊 處
COMPANIES REGISTRY
The FATF (4)
 Methodology for assessment comprises two components –
• technical compliance assessment – addresses the specific
requirements of the FATF Recommendations, as they relate
to the relevant legal and institutional framework of the
country, and the powers and procedures of the competent
authorities

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公 司 註 冊 處
COMPANIES REGISTRY
The FATF (5)
• effectiveness assessment – assesses the adequacy of the
implementation of the FATF Recommendations, and
identifies the extent to which a country achieves a defined
set of outcomes (11 Immediate Outcomes) that are central
to a robust AML/CFT system; focuses on the extent to which
the legal and institutional framework is producing the
expected results

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公 司 註 冊 處
COMPANIES REGISTRY
Mutual Evaluation on Hong Kong, China (1)
 Hong Kong has been a member of the FATF since 1991
• mutual evaluation report published in July 2008
• follow-up process
 Third round mutual evaluation
• on-site visit in November 2007

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公 司 註 冊 處
COMPANIES REGISTRY
Mutual Evaluation on Hong Kong, China (2)
 Fourth round mutual evaluation
• submitted self-assessment report on effectiveness of Hong
Kong’s AML/CFT regime (4 months before on-site visit)
• submitted self-assessment report and update on Hong
Kong’s technical compliance (6 months before on-site visit)
• on-site visit by the assessment team in November 2018

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公 司 註 冊 處
COMPANIES REGISTRY
Mutual Evaluation on Hong Kong, China (3)
• face-to-face meeting (8 weeks before Plenary discussion)
• exchanges with the assessment team on formulation of
mutual evaluation report
• Plenary discussion and adoption of mutual evaluation report
(June 2019)
• publication of mutual evaluation report

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公 司 註 冊 處
COMPANIES REGISTRY
Mutual Evaluation on Hong Kong, China (4)
 Preparation for mutual evaluation
• Central Coordinating Committee on AML/CFT, chaired by the
Financial Secretary, steers on the formulation of AML/CFT policies
and the implementation of the AML/CFT regime
• publication of the Hong Kong Money Laundering and Terrorist
Financing Risk Assessment Report
• enactment of legislations to address gaps in the legislative
framework

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公 司 註 冊 處
COMPANIES REGISTRY
Mutual Evaluation on Hong Kong, China (5)
• promulgation of enhanced AML/CFT guidelines by regulators to
complement the legislative framework
• pre-mutual evaluation workshops for public sectors and private
sectors which would participate in the on-site interviews
• further strengthening in the enforcement, supervision and
capacity-building work of relevant agencies

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公 司 註 冊 處
COMPANIES REGISTRY
Role of the Companies Registry (1)
 Presents the case of Hong Kong in the mutual evaluation in relation
to –
• licensing regime for trust or company service providers (“TCSPs”)
• significant controllers register (“SCR”) – beneficial ownership
information
 Today, to focus discussion on TCSPs and SCR
• formation of companies
• licensing regime for money lenders

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公 司 註 冊 處
COMPANIES REGISTRY
Role of the Companies Registry (2)
– Registry for TCSPs
 A new licensing regime for TCSPs was introduced on 1 March 2018
under the Anti-Money Laundering and Counter-Terrorist Financing
Ordinance (Cap. 615) – A new office, the Registry for TCSPs, was set up
 Every TCSP, unless exempted, must obtain a licence from the Registrar
of Companies and satisfy a “fit-and-proper” test before they can
provide trust or company service in Hong Kong
 TCSP licensees are required to comply with statutory customer due
diligence and record-keeping requirements prescribed in Cap. 615

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公 司 註 冊 處
COMPANIES REGISTRY
Role of the Companies Registry (3)
– Registry for TCSPs
 Conducts checking, on-site inspections and interviews of the
applicants for TCSP licences
 Monitors compliance with AML/CFT requirements by TCSP
licensees through on-site inspections and off-site monitoring

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公 司 註 冊 處
COMPANIES REGISTRY
Role of the Companies Registry (4)
– Registry for TCSPs
• revoke or suspend a TCSP licence
• disciplinary action – public reprimand, remedial order and
pecuniary penalty
• offence of carrying on trust or company service business
without licence
 Enforcement

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公 司 註 冊 處
COMPANIES REGISTRY
Role of the Companies Registry (5) – SCR
 Amendments were made to the Companies Ordinance (Cap.
622) requiring all companies incorporated in Hong Kong (except
listed companies), with effect from 1 March 2018, to ascertain
the individuals and legal entities that have significant control
over the company, and maintain an SCR

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公 司 註 冊 處
COMPANIES REGISTRY
Role of the Companies Registry (6) – SCR
 The major obligations of a company include –
• keeping an SCR at the company’s registered office or a
prescribed place
• taking reasonable steps to ascertain the company’s
significant controllers

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公 司 註 冊 處
COMPANIES REGISTRY
Role of the Companies Registry (7) – SCR
• keeping the particulars up-to-date
• allowing inspection and making copies of the SCR by law
enforcement officers upon demand
• entering the required particulars of the significant controllers
in the SCR

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公 司 註 冊 處
COMPANIES REGISTRY
Role of the Companies Registry (8) – SCR
 Conducts on-site inspections to check compliance with the new
requirements and verify the accuracy of the information in the
SCRs
• failure to keep/maintain up-to-date SCR
• providing false information/statement
 Enforcement

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公 司 註 冊 處
COMPANIES REGISTRY
Thank You