Due Diligence Requirements for Persons Acting on Behalf of Customers of Hong Kong Companies
Introduction
On 3 March 2025, the Hong Kong Companies Registry formally amended the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (for TCSP licensees). The amendment explicitly requires all trust or company service providers (“TCSPs”) to identify their customers, including but not limited to directors, shareholders, ultimate beneficial owners and any person who appears to be acting on behalf of the customer. To address potential misunderstandings, this article clarifies the Companies Registry’s due diligence requirements for “Person Purporting to Act on Behalf of Customers” (“PPTAs”).
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Definition of PPTA
According to Chapter 4, Section 5 of the Guideline, a customer (whether an individual, corporate entity or trust) may appoint another person to establish a business relationship or authorize another person to instruct a TCSP in relevant activities. Where the customer is a corporate entity, meaning the TCSP licensee provides services to a Hong Kong company, any director, shareholder, employee, or contact person who engages with the TCSP on behalf of that company is regarded as a PPTA.
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Identification and Verification of Such Persons
Once a person is confirmed to fall within this category, the TCSP must perform reasonable due diligence, including:
(1)
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Collection and authentication of identity documents
Reasonable measures must be taken to collect and verify identity documents issued by local or overseas government authorities, such as:
(a) Hong Kong Identity Card or other national identity card;
(b) Valid travel documents (e.g., unexpired passports); or
(c) other relevant documents, data or information provided by a reliable and independent source (e.g. document issued by a government body).
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(2)
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Verification of authorization documents
Confirm whether the person has been formally authorized in writing (e.g., board resolution or authorization letter).
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(3)
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Notification of changes
If there is any change in the person acting on behalf of the customer, the customer must promptly notify the TCSP in writing and the TCSP must re-perform the identification and authorization verification procedures.
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Timeframe for Identity Verification
The Companies Registry requires TCSPs to complete identity verification before establishing a business relationship with the customer or its representative. Only in exceptional circumstances may verification be completed within a reasonable period after the relationship has been established.
The general timeframe is no later than 30 working days after the business relationship is established. If verification cannot be completed within this period, the TCSP must temporarily suspend the relationship and refrain from further transactions. If verification remains incomplete after 120 working days, the TCSP must terminate the business relationship.
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Disciplinary Actions
The Companies Registry has stepped up enforcement and inspections. TCSPs that fail to comply may face disciplinary measures, including:
(1)
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Failure to identify and verify the identity and authorization of beneficial owners and persons purporting to act on behalf of customers;
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(2)
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Failure to properly maintain originals or copies of identity documents of customers or their beneficial owners.
Violations may result in public reprimand and fines of up to HKD30,000, with immediate corrective action required to mitigate money laundering and terrorist financing risks. Continued non-compliance may lead to more severe sanctions, including license revocation.
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Conclusion
These amendments and additional licensing requirements aim to prevent criminals from concealing their true identities by acting through others or using illegally obtained identity documents. While the changes may cause inconvenience to customers and pose challenges for some service providers, this article seeks to help customers understand the new requirements and dispel misconceptions. Our firm will strictly implement the relevant regulations to ensure compliance and minimize risks.
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