On 21 May 2021, Hong Kong’s Financial Services and Treasury Bureau (the FSTB) published its Consultation Conclusions on legislative proposals to enhance anti-money laundering and counter-terrorist financing (AML/CTF) regulations in Hong Kong1 (Consultation Conclusions) in respect of Hong Kong dealers in precious metals and stones (DPMS). These Consultation Conclusions are made in response to the FSTB’s consultation paper2 issued on 3 November 2020 proposing a new registration regime for DPMS in Hong Kong. For a detailed discussion of the consultation paper, please see our newsletter FSTB Consults on Proposed Registration Regime for Dealers in Precious Metals and Stones.3
Following the imposition of AML/CTF obligations on financial institutions and certain designated non-financial businesses and professions (DNFBPs) under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO) in 2018, the Financial Action Task Force (FATF) has recommended imposing a range of AML/CTF obligations to improve the regulation of the DPMS sector, which also falls within the category of DNFBPs. The FSTB proposes to follow the FATF recommendations through the introduction of a new two-tier registration regime for DPMS under the AMLO. It is proposed that any natural or legal person who wishes to carry on the business of DPMS regulated activities in Hong Kong would be required to register under either Category A or Category B with the Commissioner for Customs and Excise (CC&E), who will act as registrar (the Registrar) in maintaining a register of dealers of precious metals and stones. Under the proposed regime, subject registrants engaging in cash transactions at or above HK$120,000 will fall under Category B and will need to comply with the AML/CTF obligations stipulated in Schedule 2 to the AMLO.
The Consultation Conclusions also outline the FSTB’s responses to its proposals to introduce a licensing regime for Hong Kong virtual asset exchanges, which is covered in our newsletter FSTB Concludes Consultation on Licensing Regime for Hong Kong Virtual Asset Exchanges.4