The Legislative Council of Hong Kong approved the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 on December 7, 2022. The bill establishes a registration process for dealers in precious metals and stones (DPMS) and places statutory AML/CTF requirements on the DPMS industry.

Following the implementation of Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) regulations on Financial Institutions and Certain Designated Non-Financial Businesses and Professions (DNFBPs) as mandated by the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO) in 2018, the government has introduced a new two-tier registration system under the AMLO specifically for Dealers in Precious Metals and Stones (DPMS). DPMS is one of the categories of DNFBPs outlined by the Financial Action Task Force (FATF) for AML/CTF regulation, and oversight will be provided by the Commissioner for Customs and Excise. The revised ordinance pertaining to the Registration Regime for Dealers in Precious Metals and Stones (DPMS) took effect on April 1, 2023.

New Registration System under Anti Money Laundering (Amendment) Bill 2022

Individuals or entities seeking to engage in business activities related to precious metals and stones in Hong Kong, involving transactions totaling HKD 120,000 or more, must complete the registration process with the Commissioner of Customs and Excise.

There are two categories of Registration:

1. Category A – Category A registration is required for DPMS who intend to engage in non-cash transactions of HKD 120,000 or above. Applications must provide the following documents:
   1. Valid business registration certificate
   2. Business address of all premises in Hong Kong
   3. Declaration that the registration is obtained for a lawful purpose.

Validity of Category A Registration: Category A Registrants are required to remit an annual fee as detailed in Schedule 3K, to the CCE on or before each yearly anniversary of their registration’s commencement. Failure to make this annual payment could result in the cancellation of the Category A Registration.

2. Category B –

Dealers seeking to engage in cash transactions of HKD 120,000 or above are mandated to enroll as Category B registrants. They will be subjected to a fit-and-proper evaluation, akin to the assessment process applicable to other designated non-financial businesses and professions (DNFBPs) as outlined in the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). Additionally, Category B registrants will be subject to Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) oversight. The Category B registration remains valid for a period of three years, and upon its expiration, Dealers in Precious Metals and Stones (DPMS) must ensure compliance with the fit-and-proper criteria for the renewal process.

Compliances in DPMS regime

The compliances required in DPMS regime are specified under the Anti Money Laundering (Amendment) Ordinance 2022.

According to section 53ZUC of the ordinance, The Commissioner must maintain a register of persons registered in a form the Commissioner considers appropriate. The register must specify the information of the registrant such as the name of the registrant, whether the registrant is a Category A registrant or a Category B registrant, the address of the registrant’s principal place of business, and the address of each branch of the registrant (if any). And the register must be made available for inspection to the members of the public, without any charges.

A person according to section 53ZUD on the payment of the specified fees (under schedule 3K of the ordinance) may obtain the certified or uncertified copy of the entry in the register.

A registrant according to section 53ZV must display the certificate of registration in a visible area in the principal place of business and if there is any branch of the business then the registrant must display the branch certificate in every branch of the business. Failing to do so results in a commission of an offence and is punishable with a level 5 fine.