A TCSP license in Hong Kong is essential for businesses offering trust or company services, ensuring compliance with stringent Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations. The application process involves meeting eligibility criteria, submitting required documents, and maintaining ongoing compliance, including customer due diligence and record-keeping.
A Trust or Company Service Provider (TCSP) license is a regulatory requirement for individuals or businesses in Hong Kong that offer trust or company services. These services include acting as a company secretary, providing registered office addresses, or assisting in the formation of companies, for example, ATHENASIA Consulting is registered with Hong Kong Registry for Trust and Company Service Providers under number: TC000116. The TCSP license is part of Hong Kong’s efforts to ensure compliance with global standards on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF).
This article will provide a comprehensive overview of the TCSP license, including the eligibility criteria, application process, and ongoing compliance requirements.
Why is a TCSP License Important?
Hong Kong is a global financial hub, and the city’s regulatory framework is designed to maintain its reputation as a safe and reliable place to do business. The TCSP license is a key part of this framework, ensuring that trust and company service providers operate in a transparent and compliant manner.
By requiring these businesses to meet stringent AML/CTF standards, Hong Kong aims to prevent its financial system from being exploited for illicit activities such as money laundering or terrorist financing.
Eligibility Requirements for a TCSP License
Before applying for a TCSP license, it’s essential to understand the eligibility criteria. The license can be issued to individuals, partnerships, or companies that intend to provide trust or company services. However, all applicants must meet the following requirements:
1. Fit and Proper Test
The "fit and proper" test is a crucial part of the application process. This test ensures that the applicant and key personnel, such as directors or ultimate beneficial owners (UBOs), are suitable to operate a TCSP business. Individuals with criminal convictions related to dishonesty, fraud, or money laundering are automatically disqualified. Additionally, the applicant must demonstrate a clean track record in business operations, particularly in areas related to financial integrity and compliance.
2. Business Registration
Before applying for a TCSP license, the applicant must register their business with the Companies Registry of Hong Kong. For individuals, this means obtaining a Business Registration Certificate from the Inland Revenue Department (IRD). For companies, you will need to provide the Certificate of Incorporation and other relevant documents, such as particulars of directors and shareholders.
AML/CTF Compliance: A Core Requirement
A significant part of obtaining and maintaining a TCSP license is ensuring compliance with Hong Kong’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). TCSP license holders are required to implement robust AML/CTF procedures, including customer due diligence (CDD) and record-keeping.
1. Customer Due Diligence (CDD)
CDD involves verifying the identity of clients and understanding the nature of their business. This is particularly important when dealing with high-risk clients, such as those from jurisdictions with weak AML/CTF regulations. TCSP providers must also identify the ultimate beneficial owners (UBOs) of companies they assist.
2. Record-Keeping
All TCSP license holders are required to maintain accurate records of their clients and transactions. These records must be kept for at least five years and should be readily available for inspection by regulatory authorities. Failure to comply with these requirements can result in severe penalties, including the revocation of the TCSP license.
Preparing the TCSP License Application
Once you’ve ensured that your business meets the eligibility criteria and AML/CTF requirements, the next step is to prepare your application. The following documents are typically required:
1. Company Information
For companies applying for a TCSP license, you’ll need to submit the Certificate of Incorporation, Business Registration Certificate, and particulars of directors and shareholders. This information helps the Companies Registry assess the transparency and legitimacy of your business.
2. Personal Information
If you’re applying as an individual, you’ll need to provide personal identification documents, such as a passport or Hong Kong ID card, along with background checks to prove that you meet the "fit and proper" criteria.
3. AML/CTF Policy
A critical part of the application is submitting your company’s AML/CTF policy. This document should outline the internal controls and procedures you’ve implemented to ensure compliance with the AMLO. It should include details on how you conduct customer due diligence, monitor transactions, and report suspicious activities.
Submitting the Application
Once you’ve gathered all the necessary documents, you can submit your TCSP license application either online via the Companies Registry website or in person at the Trust or Company Service Providers Licensing Section. The application fee is non-refundable and, as of 2024, is set at HKD 3,440 for a new license.
Awaiting Approval
After submitting your application, the Companies Registry will review it to ensure that all requirements are met. This process includes verifying your compliance with the AML/CTF regulations and assessing whether you and your key personnel pass the "fit and proper" test. If your application is successful, you will be issued a TCSP license, which is typically valid for three years.
Renewal and Ongoing Compliance
Once you’ve obtained your TCSP license, it’s essential to maintain compliance with Hong Kong’s regulatory framework. The license must be renewed every three years, and the renewal fee is currently HKD 1,750. To avoid penalties or the revocation of your license, you must ensure that your business continues to meet the following requirements:
1. AML/CTF Standards
You must continue to implement and update your AML/CTF procedures, particularly as regulations evolve. Regular audits and staff training are recommended to ensure that your business remains compliant.
2. Annual Maintenance
In addition to renewing your TCSP license, you must also fulfill other annual maintenance requirements, such as filing an annual return with the Companies Registry and renewing your Business Registration Certificate. Failure to meet these obligations can result in fines or other penalties.
3. Significant Controller Register (SCR)
As part of ongoing compliance, TCSP license holders are required to maintain a Significant Controller Register (SCR). This register lists individuals or entities with significant control over the company, defined as owning more than 25% of the company’s shares or voting rights. The SCR must be updated regularly and made available for inspection by law enforcement officers upon request.
Conclusion
Obtaining a TCSP license in Hong Kong is a multi-step process that involves meeting stringent eligibility criteria, complying with AML/CTF regulations, and maintaining ongoing compliance. While the process may seem complex, it is an essential part of ensuring that trust and company service providers operate transparently and responsibly. By following the steps outlined in this article, you can navigate the application process and maintain your TCSP license, helping to build trust with your clients and regulators alike.
The TCSP license is not just a regulatory requirement; it is also a mark of credibility in the highly competitive business environment of Hong Kong. Whether you are an individual or a company, obtaining and maintaining this license will allow you to offer trust and company services with confidence, knowing that you are fully compliant with Hong Kong’s robust regulatory framework.
