News & Insights

SFC licensing and compliance hints – Oct 2015

Different licences for everyone!

Q: Why should no one do any regulated activities in Hong Kong without an appropriate SFC licence?
A: It is a criminal offence to conduct a regulated activity in Hong Kong without a licence.

Q: What about someone who just flies in and flies out to meet with investors in Hong Kong?
A: They still need to be licensed. Depending on how often they will come to Hong Kong, there are different types of licence available.

Overseas individuals from group entities outside Hong Kong can apply for either a temporary licence with the group’s Hong Kong licensed entity or a licence as an itinerant professional. In both cases, the applicant will be exempt from taking local licensing exams.

Itinerant professionals can carry out regulated activities for and on behalf of a licensed company in Hong Kong for up to 30 days in each calendar year, while a temporary licence is a one-off licence. A temporary licence can be valid for up to three months. However, a person cannot be licensed under a temporary licence for more than six months within any 24 month period. Temporary licences are not available for asset management activity and certain other types of regulated activity.

If individuals are likely to conduct regulated activities in Hong Kong for longer than 30 days in each calendar year, or more than six months within any 24 month period, they will need to apply for a normal licence instead.  They will need to take the local licensing exam (paper 1), although they will usually be granted six months to pass it from when the licence is issued.

CPT 2015

As we are now reaching the end of 2015, it is worthwhile doing a CPT stock-take on all licensed individuals. If your company has licensed individuals who still need to collect annual CPT hours for this year, you should remind them to take action soon. If your company has individuals who need to take additional CPT hours to comply with conditional exemptions from taking licensing exams, this may also be a good time to check how may CPT hours they still need to collect.

Time to plan for your AML / CFT training

As 2016 approaches, now is a good time to start planning your compliance training schedule for the upcoming year.

Anti-money laundering / counter-terrorist financing (AML / CFT) is always a hot topic on intermediaries’ training agendas. Such training serves as an important means to enhance staff awareness of potential money laundering (ML) or terrorist financing (TF) activities, as well as their obligations when they suspect ML or TF activities. Staff awareness is critical to an intermediary’s AML / CFT systems and controls.

Intermediaries should review and update AML / CFT training materials on a regular basis to ensure their adequacy and relevance. Where appropriate, you should consider using different training materials for staff carrying out different functions.

When you next review your AML / CFT training materials, ask yourself do they cover:

  • background to ML / TF activities?
  • updates on new techniques, methods and trends in ML / TF activities?
  • the company’s stance against ML / TF activities, and the measures that it has put in place to combat such activities?
  • updates on regulatory developments?
  • descriptions of the company’s AML / CFT policies and procedures (e.g. customer due diligence and record-keeping requirements, identifying and reporting of suspicious transactions to the Money Laundering Reporting Officer (MLRO)?
  • the company and its staff’s statutory and regulatory obligations and internal requirements against ML / TF activities, and the possible consequences of breaching them?
  • staff’s role and responsibilities in the company’s AML / CFT systems and controls?
  • responsibilities of management and the MLRO?

Remember, you need to maintain records of all AML / CFT training (including materials and staff attendance records) for at least three years, assess the effectiveness of such training (e.g. have “post-training” quizzes and monitor the quantity and quality of reporting of suspicious cases), and give additional training if necessary.

RSVP to the SFC’s AML / CFT seminar in November

The SFC released a circular on 22 October 2015 inviting intermediaries to attend the SFC Anti-Money Laundering and Counter-Terrorist Financing (AML / CFT) Seminar. The seminar will be hosted on three half-days on 18, 24 and 30 November 2015 respectively.

AML / CFT compliance is a radar item on the SFC’s list. Intermediaries are encouraged to attend this seminar for an update on AML/CFT regulatory developments.

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