Building long-term business relationship with financial institutions

Events

Given that banking service is one of the crucial elements for licensed money changers to do business, our Association is committed to strive high quality business environment for MSO industry. Our work performed:

2018

September
24st

All Money Service Operators should note that the Hong Kong Monetary Authority (“HKMA”) has provided the Contact Information of 20 Retail Banks in Hong Kong on its website, which includes the required information and documents needed for opening a bank account
HKMA has also provide an Enquiry Hotline for Account Opening and Maintenance:

Enquiry Hotline: (852) 2878 1133
E-mail: [email protected]

Should a Money Service Operator consider that the bank has not handled the account opening application properly, he/she can make a complaint to HKMA. Details of Complaint Processing Centre (For bank complaints) are as follow:

Enquiry Hotline: (852) 2878 1378
Fax: (852) 2509 3990
E-mail: [email protected]

2014

September 24st	All Money Service Operators should note that the Hong Kong Monetary Authority (“HKMA”) has provided the Contact Information of 20 Retail Banks in Hong Kong on its website, which includes the required information and documents needed for opening a bank account DHKMA has also provide an Enquiry Hotline for Account Opening and Maintenance: Enquiry Hotline: (852) 2878 1133 E-mail: [email protected] Should a Money Service Operator consider that the bank has not handled the account opening application properly, he/she can make a complaint to HKMA. Details of Complaint Processing Centre (For bank complaints) are as follow: Enquiry Hotline: (852) 2878 1378 Fax: (852) 2509 3990 E-mail: [email protected]
April 1st	A new webpage "Bank Relationship" has officially been set up in our Association's website. Through the webpage, we hope to enhance the communication with respective financial institutions and to enable them to better understand the licensing system, the monitoring by HKC&ED and the relevant legislation and guidance which Hong Kong money service operators are subject to/should comply with. At the same time, we convey to licensed money changers ways they should conduct their businesses in order to cooperate better with banks, e.g. providing clear and accurate information and documents, and reasonably responding to requests from banks. All in all, we aim to promote the establishment of a long-term business relationship between money changers and banks.
March 7th	Our Association was invited to meet with seven local banks to discuss how licensed money changers can build a sustainable business relationship with banks. Discussion points include: Our Association explained to respective banks that MSOA is a non-profit organization aiming to assist all licensed money changers to understand relevant laws, to provide the industry with a business environment with high compliance level and at the same time to enhance the communication with respective financial institutions and governmental departments. Our Association explained to respective banks the licensing mechanism of money service operators, enabling the banks to gain more knowledge of the money service industry in Hong Kong. Money service operators are strictly required to abide to relevant licensing requirements, Cap 34 Money Changers Ordinance and Cap 615 Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The HKC&ED also continuously monitors licensed MSOs according to legal requirement. Regardless of the scale of business of money service operators, respective banks expressed that they hold a positive and open attitude towards licensed money changers opening accounts at their banks as long as they are operating in compliance with relevant laws. Banks believed it is currently an adaptation period for banks and licensed money changers since Cap 615 Anti-Money Laundering and Counter-Terrorist Financing Ordinance became effective. As long as licensed money changers properly implement their compliance procedures as required by law, it will definitely enhance the confidence in building a sustainable business relationship for both parties. Our Association suggests licensed money service operators to perform the followings: Lay down and obtain understanding in compliance policies and procedures (including Customer Due Diligence, On-going Monitoring, etc.) and to put these relevant policies and procedures into practice. Keep proper transaction records. Provide banks accurate information and adequate assistance during sample-testing of records. Provide staff with more comprehensive training on anti-money laundering.
February 12th	Our Association discussed with the Money Service Supervision Bureau of the HKC&ED. When licensed money changers deal with transactions involving virtual commodities, our Association would like to emphasize that licensed money changers should avoid becoming third party payment channels for stored-value accounts or transactions on Bitcoin related platforms. This is especially so for anonymous customers as such service can lead to relatively higher risk of money laundering and terrorist financing. In relation to the license renewal application of operating money service, the HKC&ED has sent out the first batch of license renewal reminder to licensed money changers today. The application for renewal of an MSO licence must be made within 90 days but not later than 45 days before the licence is due to expire. Otherwise, the licensee needs to apply for a fresh new MSO licence and that it is an offence to operate money service. A licensee needs to notify the HKC&ED of changes in MSO registration particulars by completing Form 6 (Notification of Changes in Particulars) within 1 month of such changes. The meeting between our Association and banks to be organized by the Hong Kong Monetary Authority is still yet to be scheduled.
February 4th	Our Association followed up with the Money Service Supervision Bureau of the Hong Kong Customs & Excise Department (HKC&ED) on: The Hong Kong Monetary Authority arranged a meeting between our Association and banks to discuss about the sustainability of the operational relationship between banks and licensed money changers as well as relevant compliance requirements. On 30 January 2014, the HKC&ED issued a circular to licensed money changers on the money-laundering and terrorist-financing risks associated with virtual commodities (e.g. Bitcoin etc). As previously suggested by our Association, licensed money changers should be very cautious when dealing with these investments. Licensed money changers should also avoid becoming third party payment channels for stored-value accounts or transactions on Bitcoin related platforms. This is especially so for anonymous customers as such service can lead to relatively higher risk of money laundering and terrorist financing.
January 28th	In response to our request to the Hong Kong Monetary Authority (HKMA) in providing certain information related to banks and money changers, the Money Service Supervision Bureau of the Hong Kong Customs and Excise Department (HKC&ED) provided the following responses: HKMA failed to provide relevant information including the number of terminated accounts by banks, the standard banks use to decide whether to terminate an account and the number of reported suspicious transactions that involve money changers etc. HKMA only replied that they have not categorized money changers as high risk industry and that they will not lay down any guidelines for the operations between banks and money changers. Our Association reiterated that currently MSOs are strictly required to abide to relevant licensing requirements, Cap. 34 Money Changers Ordinance and Cap. 615 Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The HKC&ED also continuously monitors licensed MSOs according to legal requirement. Hence, banks should not cast doubt to the system of the money service industry. Our Association is ready to meet with any banks in order to discuss the sustainability of operational relationship between banks and licensed money changers as well as relevant compliance requirements.
January 17th	Met with the Money Service Supervision Bureau of the HKC&ED for the third time to discuss about the sustainability of the operational relationship between banks and licensed money chargers. Currently, licensed money changers are required to strictly abide to relevant licensing requirements, Cap. 34 Money Changers Ordinance and Cap. 615 Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The HKC&ED also monitors licensed money changers in an on-going basis as required by the law. As a result, banks should not cast doubt to the system of the money service industry. Our Association hopes the Hong Kong Monetary Authority can provide information/statistics including: the number of terminated accounts by banks, the standard banks use to decide whether to terminate an account, the number of reported suspicious transactions that involve money changers and whether money changers are being categorized as high risk, etc. Our Association suggested the Hong Kong Monetary Authority to lay down relevant banking guidelines which clearly sets out protocols for the operations between banks and money changers for both parties to follow. Our Association is willing to provide further information and comments in order to fight for reasonable operation terms for the industry. Our Association reiterated that in order to build a long-term relationship with banks, MSOs must operate with high compliance level. Our Association encourages licensed money changers to operate using computer systems with the capability of performing customer management and on-going monitoring functions. This will greatly enhance the confidence of banks towards money service operators and also help the HKC&ED in checking relevant documents. Through our Association, the HKC&ED hopes to remind licensed money changers that they should pay attention to matters around license renewal, to abide to the Trade Descriptions Ordinance and to report suspicious trading, etc.
January 13th	Our Association followed up with Legislative Council members Hon Ng Leung-sing and Hon Starty Li Wai-king in relation to the sustainability of operational relationship between banks and licensed MSOs. Reiterated that currently MSOs are strictly required to abide to relevant licensing requirements, Cap. 34 Money Changers Ordinance and Cap. 615 Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The HKC&ED also continuously monitors licensed MSOs according to legal requirement. Suggested HKMA to formulate relevant bank guidelines which clearly provide guidance on the operation between banks and MSOs. This helps to avoid misunderstanding that leads to abrupt termination or not considering to provide bank services to licensed money changers. Willing to provide further information and advice in order to strive for reasonable operating conditions for the industry. Thanked the two Legislative Council members again for striving reasonable rights for the finance industry.
January 9th	The Hong Kong Customs and Excise Department recently met with the Hong Kong Monetary Authority to discuss about the sustainability of the relationship between banks and licensed money service operators and hope that our Association can share with them difficulty faced by our counterparts when opening and maintaining bank accounts.

2013

November 28th	Follow-up with the Money Service Supervision Bureau of the Hong Kong Customs and Excise Department ("HKC&ED"). During a Council Meeting at the Legislative Council on 27 November 2013, Council Member put forward the question of the significant difficulty and inconvenience faced by industry counterparts when some of the banks refused to set up bank accounts for money changers owned by licensed money service operators. The HKC&ED advised that they have reflected the situation to Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority from time to time. Our Association expressed willingness to participate in further discussions and to provide assistance in the issue and reiterated that it would be a win-win situation for both complaint money service operators and banks in building a long-term and healthy cooperative partnership. Supervision of compliance operation by licensed money service operators - The HKC&ED advised that the law granted the Commissioner of Customs & Excise a variety of authorities against licensed money operators including disciplinary actions, disciplinary penalties and fines etc. The HKC&ED hopes that licensed money service operators will abide to the laws during operations and emphasized that supervision is a continual process. In view of the negative news reports against licensed money service operators, the HKC&ED and our Association hope to deliver more positive messages in order to enhance the confidence of citizens and banks to licensed MSOs. The HKC&ED encourages citizens and licensed MSOs to gain a thorough understanding of the Trades Description Ordinance (Chapter 362) in order to avoid disputes due to misunderstandings. SFC suspended the licensed dealing representatives and reprimanded and fined the representatives (for details, please refer to the news published by the SFC on 25 November 2013). Since the case involved services provided by money changers, the HKC&ED used the case as a reminder to money service operators that they must complete the customer due diligence process, identify source of funds and keep relevant records properly.
November 7th	MSOA followed up with issues around maintaining a long-term cooperative relationship between MSOs and banks. Through meeting with an experienced banker, MSOA frankly revealed that his bank has further tightened the requirements necessary for MSOs to open bank accounts although such policies have not created major problems for MSOs with high compliance level. MSOA suggests that all MSOs must possess compliance guideline/manual, impose required procedures and update relevant policies on a regular basis.
October	Followed up with the meeting with Legislative Council members Hon Ng Leung-sing and Hon Starry Lee Wai-king. It was reported in newspapers on 22 October 2013 that Hon Ng Leung-sing and Hon Starry Lee Wai-king will be meeting with the Hong Kong Monetary Authority and the Financial Services and the Treasury Bureau to discuss about matters surrounding how banks deal with licensed MSOs. MSOA has contacted both Legislative Council members respectively in order to follow up with the prior discussion conducted in mid-September 2013 regarding views of industry counterparts. MSOA also thanked them for their effort in striving for reasonable rights and interests for the industry counterparts. MSOA reiterated that licensed MSOs should be provided with reasonable commercial terms and seek to build a long-term and healthy cooperative relationship with banks.
September	Meeting with Legislative Council members Hon Ng Leung-sing (Functional Constituency - Finance) and Hon Starry Lee Wai-king (Vice Chairman of DAB). Invited to the meeting by experienced money charger Mr Siu and attended the meeting with a number of experienced industry counterparts. Mainly discussed about problems encountered during interaction with banks during daily operations. MSOA published views of different banks on money service operators and how they handle money service operators. MSOA shared the experience of engaging global big four accounting firms to conduct compliance review on some of the industry counterparts that maintained high compliance level. MSOA expressed willingness to participate in further discussions with Legislative Council members and officials from financial regulatory bodies as well as relevant governmental departments.
July	Discussed with a number of banks problems encountered by industry counterparts during their interactions with banks. Understand bank policies against licenced money changers and ways to establish business relationship, including opening bank accounts and requirement for future operations. Successfully discussed with a local bank about compliance standard and account opening conditions. Hope to strive for account opening for Certified Associate Members and establish long-term business relationship.