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The Hong Kong Legislative Council passed the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 on 7th December 2022, to introduce a registration regime for Dealers in Precious Metals and Stones (“DPMS”), in an effort to enhance Hong Kong’s regulatory regime for combating money laundering and terrorist financing.
The Amendment Bill seeks to introduce a licensing regime for Virtual Asset Service Providers (VASPs) and a registration regime for Dealers in Precious Metals and Stones (“DPMS”) in order to impose statutory anti-money laundering and counter-terrorist financing (“AML/CTF”) obligations on these two sectors.
Following the imposition of AML/CTF regulations 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 government proposes a new two-tier registration regime under the AMLO for DPMS, which is one of the categories of DNFBPs defined by the Financial Action Task Force (“FATF”) for AML/CTF regulation and will be regulated by the Commissioner for Customs and Excise (CC&E).
The new DPMS registration regime will come into effect from 1 April 2023 and any person who is seeking to carry on a business of dealing in precious metals and precious stones in Hong Kong will be required to register with the Commissioner of Customs & Excise.
Two-tier registration regime
Under the proposed DPMS registration regime, anyone who wishes to operate a business dealing in precious metals and stones in Hong Kong and conducts transactions at or above HK$120,000 (cash or non-cash) must register with the Commissioner of Customs and Excise under either Category A or Category B. AML/CTF requirements under Schedule 2 of the AMLO will apply to registrants who engage in cash transactions of HK$120,000 or more, placing them in Category B. No registration is necessary for dealers who solely carry out transactions involving less than HK$120,000.
Final words
Given the pace at which new risks and illicit activities can emerge, as illustrated by COVID-19, Hong Kong, as with all FATF members, will need to remain vigilant and continually adapt and enhance their AML/CTF/CPF regimes to keep abreast of new ML/TF/PF typologies and techniques.
Although transitional periods will be provided for DPMS to undergo registration in accordance with the regulatory regimes, the sooner the DPMS adopts measures to comply with the imminent registration regime and AML/CTF regulations, the better and more well-prepared everyone will be for the compliance procedures.
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Managing Partner
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