Money changers face closure threat

PUBLISHED : Thursday, 31 May, 2012, 12:00am
UPDATED : Thursday, 31 May, 2012, 12:00am


Hundreds of remittance firms and money changers may need to shut down after failing to apply for licences from the Customs and Excise Department before yesterday's deadline.

As at 5pm yesterday, 1,027 out of 2,724 remittance firms and money changers in Hong Kong had submitted licence applications with the department as required under the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance. Applicants could apply online until midnight.

Previously remittance firms and money changers only needed to register with the police. The new law requires all firms to apply for licences from customs and applicants must have premises suitable to handle money services, while their owners and management must be fit and proper persons.

After the granting of the licence, these shops will be under the same requirement as banks and brokers in that they would need to carry out due diligence on customers, and report suspicious cash transactions to help crack down on money laundering.

Edwin Shiu Man-chak, a director of Ngau Kee Money Changer, one of the largest money changers in the city, said some small money changers might not like to continue to operate under the new regime. 'Some small players may not like to continue their business because the new ordinance has added much tougher requirements and penalties. Some people also worry that they may face criminal prosecution because of a failure to comply with the new law unintentionally,' Shiu said.

The new law is aimed at bringing Hong Kong in line with international standards. Banks, brokers and insurance companies must now conduct more rigorous checks on suspicious cash transactions to crack down on money laundering or face a range of penalties including a public reprimand, a fine of up to HK$10 million or a maximum seven years in jail.

While Shiu said the law might present some problems for small operators, the change would benefit the industry as a whole.

'The regulation for remittance firms and money changers in the past was too lax. By bringing in proper regulations, it would help make people feel more comfortable using these firms' services and to strengthen the status of Hong Kong as an international financial centre,' Shiu said.

A customs spokesman said the number of applications for licences it received reflected the number of active players in the city. 'In line with the relevant experience of other jurisdictions and feedback gathered from the remittance firms and money changers trade, the introduction of a new statutory licensing regime will contribute to market consolidation,' he said.

The spokesman said customs would conduct site inspections and surveillance to interdict illicit activities. The operators of money service without a licence are liable to a fine of HK$100,000 and imprisonment for six months. Firms that have sought a licence can continue to operate until a decision is reached on their application.