Foreward by Andrew Chilvers
When the 5th Anti-Money Laundering Directive was introduced into law by the UK and EU in January 2020, for many professionals it was a much needed addition to legislation that would significantly help business transparency and combat money laundering. In essence, it was good for business and for public and professional confidence.
All jurisdictions signing up to the 5th Directive will build and maintain UBO registries that will be publicly available at any time. UBO registries will also be set up for bank accounts and trusts, although these latter two will not be publicly available but be accessed by the relevant authority such as financial intelligence units and legal advisors looking into money laundering. Investigative journalists who can show a legitimate interest in the case can also have access, which is vital if another Panama Papers (see below) is to be uncovered. Across the UK and EU national UBO registers will be set to connect through a central European platform by April 2021.
To enhance transparency of corporate beneficial ownership in order to fulfil Hong Kong’s international obligations on combating money laundering and terrorist financing, the HK Government introduced new legislation. This became operative on 1 March 2018, requiring a company incorporated in Hong Kong (except a HK listed company) to obtain and maintain up-to-date beneficial ownership information, by way of keeping a Significant Controllers Register (“SCR”), for inspection by law enforcement officers upon demand.
Before implementation of the new legislation, every Hong Kong non-listed company with share capital was only required to disclose details of its members in its annual return filed with the Companies Registry, which forms part of the public records.
Under the new legislation, every company (except Hong Konglisted companies) is also required to review its documents to identify individuals who (and legal entities which) have significant control over a company, give notice to them, and obtain accurate and up-to-date information about their identities. The required particulars should be entered into the company’s SCR within seven days after they have all been provided or confirmed or come to the notice of the company.
The company will have to designate a representative to serve as a contact point for providing information about the SCR and related assistance to law enforcement officers.
If a company fails to comply with the requirement of keeping an SCR, the company, and each of its responsible persons, will be liable on conviction to a fine up to HK$25,000 and a daily fine of HK$700. If an addressee of the notice fails to comply with the notice, he and every related person commit an offence and each is liable to a fine of up to HK$25,000. If any person is found giving any false information or statement, they will be liable not only to a fine but also imprisonment for up to 2 years.
Although the SCR is not required to be filed with the Companies Registry (“CR”), the CR is empowered to investigate if there are any companies which are in default. From March 2018 to September 2019, over 7,000 companies have been inspected and 166 summonses were issued for non-compliance with this legislation.
Sino Corporate Services Limited is a licenced trust and corporate service provider (“TCSP”) in Hong Kong. We have professionals who are well acquainted with the legal requirements to assist our clients to identify the significant controllers of their companies and prepare the necessary notice(s) and SCR for them.
As a TCSP, we are also qualified to act as the Designated Representative in relation to the SCR for our clients and deal with law enforcement officers upon their request.
Whilst laws and regulations will be updated from time to time to enhance Hong Kong’s regulatory regime for combating money laundering and terrorist financing, we, being a professional corporate service provider, shall keep our clients abreast of such updates and assist them to fulfil any legal requirements.
In China, the government registry only ask for the full name of the UBOs when application documents for setting up a company are submitted. No other information needs to be provided. However, when the company open bank accounts, the bank will ask the company to provide detailed UBO information, including but not limited to, the full name, the passport number and the shareholding percentage.
What changes can we expect to see emerging, are any new proposals expected?
There are no new proposals at the moment.