Changes to License Information

Created on 16 July 2014

According to the Licensing Guide of the HKCE, all MSO licensees are obliged to inform any changes to the license information to the HKCE on a timely basis.  Otherwise, the HKCE can disapprove the relevant change request and impose disciplinary actions onto the licensee.


Changes that require CCE’s prior approval


(a) when there is a person proposing to become licensee’s director

(b) when there is a person proposing to become the licensee’s ultimate owner

(c) when there is a person proposing to become the licensee’s partners

(d) when the licensee wishes to add premises to operate a money service or operate a money service at any particular premises

(e) when the licensee intends to cease to operate a money service or to cease to operate a money service at any of the premises specified in the license


The AMLO provides that a person who, without reasonable excuse, contravenes any of the above requirements commits an offence and is liable on conviction to fine of HK$50,000 and to imprisonment for 6 months. The CCE may also take disciplinary actions under the AMLO for contravention of the AMLO and the licensee could be liable to fine of HK$1,000,000.


Notification of changes in particulars in writing within one month beginning on the date on which the changes takes place


(a) Change in Business / Corporation Name

(b) Change in the Nature of Money Service Business

(c) Change in Principal (Correspondence) Address

(d) Change in Contact Information

(e) Change in Business Premises Information

(f) Change in Telephone and Fax No. of Business Premises

(g) Change in Information of other Business Being run in the Business Premises

(h) Change in Occupants of Domestic Business Premises

(i) Change in particulars of Sole Proprietor / Partners / Directors / Ultimate Owners

(j) Change in Partners / Directors / Ultimate Owners

(k) Change in “Fit and Proper” status of Proprietor / Partner / Director / Ultimate Owner

(l) Change in bank account used for operating money service business


The AMLO provides that a person who, without reasonable excuse, contravenes any of the above requirements commits an offence and is liable on conviction to fine of HK$50,000. The CCE may also take disciplinary actions under the AMLO for contravention of the AMLO and the licensee could be liable to fine of HK$1,000,000.


If you have any questions on the above, please contact us for further details.

With lawsuit against FinCEN and US Treasury Secretary, Macau bank fights its ‘death sentence’

Created on 17 June 2014

By Daniela Guzman
June 11, 2014

One of the most potent anti-money laundering tools in the enforcement arsenal of US regulators is being challenged in a Washington, DC courtroom, in a lawsuit by a small Macau bank whose ties to the US financial system were severed by order of the Financial Crimes Enforcement Network.

Banco Delta Asia (BDA) is suing the US Treasury’s FinCEN for its application of Section 311 of the Patriot Act, sometimes called a “death sentence” for non-US institutions who rely on access to US dollar clearing through correspondent accounts. Treasury Secretary Jack Lew and FinCEN Director Jennifer Shasky Calvery are also named as defendants in the complaint.

The lawsuit challenges the application of one of the “special measures” of Section 311 to BDA, as well as the very constitutionality of the provision. It claims that the regulator’s designation of the bank in 2005 as an institution of “primary money laundering concern” lacked evidentiary support and was conducted “without observance of procedure required by law,” according to the complaint.

Additionally, the complaint alleges that the rule itself violates the US Constitution, arguing that “Section 311 unconstitutionally delegates legislative power to the Executive Branch.”

The case was originally filed in March 2013. A court document filed in late May of this year suggests that FinCEN and the plaintiffs may be in talks to negotiate a settlement outside the courtroom.

Section 311 of the Patriot Act amended the Bank Secrecy Act to add a provision on “special measures for jurisdictions, financial institutions, international transactions, or types of accounts of primary money laundering concern.” The five “special measures” laid out in Section 311 are some of the more powerful enforcement tools available to US regulators, and the fifth is typically regarded as the harshest.

It prohibits US banks from maintaining correspondent accounts for institutions designated as a “primary money laundering concern” by administrative order of the US Treasury. This measure has been used 17 times against financial institutions since the Patriot Act was enacted in 2001, in some cases causing their demise.

In September 2005, FinCEN first signaled it was considering imposing the special measure on BDA with a notice of proposed rulemaking, asserting that the North Korean government was using the Macau bank as a channel for money laundering and other illegal activities. The notice also stated that the bank had inadequate AML controls and regulatory oversight. BDA did have a number of accounts with ties to North Korean customers and banks. FinCEN did not designate the country of North Korea and its banks as a primary money laundering concern.

BDA fights ‘death sentence’ amid possible settlement

BDA may have an uphill battle ahead to prove its constitutional claims, says Jim Byrne, the director of the Institute of International Banking Law and Practice. He notes the US government is free to exercise its power over US banks and their correspondent relationships, including prohibiting their business with banks like Banco Asia Delta.

“The question comes down to whether the procedures followed were proper and provided due notice. If not, then more “t”s will have to be crossed and “I”s dotted but there is no doubt that a finding that North Korea is a money laundering threat would not be unreasonable and that a prohibition of dealing with banks that facilitate its actions would be justified,” Byrne said.

Banco Asia Delta survived the measure, despite financial difficulties. In the past, however, the imposition of the fifth special measure under Section 311 has indeed been a “death sentence” for financial institutions. Liberty Reserve, a web-based virtual currency transfer system, was put on FinCEN’s Section 311 list in 2013, and was shut down shortly after.

In another recent case, the measure was used on Lebanese Canadian Bank, which is now defunct and is attempting to settle a lawsuit with the US Treasury for laundering money for terrorist organizations.

After suit, Treasury sought delay

Delta Asia Group, the holding company of BDA, and its chairman Stanley Au filed the lawsuit in March 2013, claiming that FinCEN failed to provide specific facts and evidentiary support for its allegations the bank served as a conduit for North Korean money laundering. The plaintiffs also allege that the bank was deprived of the opportunity to comment meaningfully on the proposed rulemaking or to challenge the evidence, while being ignored by FinCEN during remediation efforts.

The complaint argues that FinCEN did not identify any specific illicit conduct that had actually been facilitated by or through accounts at BDA, nor did it explain why it had arranged the return of $23 million in frozen funds to allegedly “high risk” customers in the Spring of 2005.

By April 2007, all US banks had closed their correspondent accounts with BDA, as well as some non-US institutions that feared they would face sanctions for doing business with the blacklisted bank. After two administrative petitions to FinCEN requesting it rescind the special measure, BDA filed its lawsuit.

The US Treasury succeeded in staying the lawsuit for over a year while the agency entered into discussions with BDA, according to a document released last week by the District Court of the District of Columbia that explains the status of the pending litigation. The case has been stayed until February 2015 as Treasury seeks to work with the bank to “allay FinCEN’s concerns.”

State Department official calls BDA ‘sacrificial lamb’

A State Department official who helped create the US financial strategy regarding North Korea testified before Congress in 2007 shortly before the measure took effect. David Asher, as quoted in a New York Times article “The Money Trail that Linked North Korea to Macao,” told Congress that the US has allegedly uncovered voluminous evidence of North Korean money laundering at several banks in Macau but chose BDA for sanctions because it was an “easy target in the sense that it was not so large that its failure would bring down the financial system.”

According to Asher, Banco Delta Asia was a “sacrificial lamb” in US financial policy on Macau. He explained to Congress that “Banco Delta was a symbolic target. We were trying to kill the chicken to scare the monkeys, and the monkeys were big Chinese banks doing business in North Korea.”

If not settled, case may raise questions on selective use of Section 311

Byrne, from the Institute of International Banking Law and Practice, said that the claim that there are greater offenders may not have bearing in the case.

“While selective enforcement of AML provisions may be problematic, it probably comes down to a matter of discretion in matters involving US foreign and economic policy to which our courts should probably defer,” Byrne said.

In an effort to alleviate the US Treasury’s apprehension about the bank before the final ruling came into effect, BDA also retained Deloitte Touche Tomatsu to advise on a new and improved AML program. Later KPMG vetted the compliance program as “effective” in a review organized by the Macau Monetary Authority.

In the preamble to the Final Rule, FinCEN acknowledged that Macau authorities “have taken a number of additional important steps since the September 2005 Notice of Proposed Rulemaking . . . to address the reported money laundering risks and systemic vulnerabilities.”

Recent court filings suggest that FinCEN and the plaintiff are in talks to negotiate a settlement outside the courtroom. However, larger questions over enforcement policies may arise if the case remains in court.

“The inability to access the US banking system would be fatal for most banks,” Byrne said.

“That reality provides the US with an important weapon which can serve to protect our interests and citizens as long as it is not abused,” he continued. “The matter of abuse, whether this was due process observed, is important and is the most positive aspect of this case. The courts will be able to review the exercise of discretion from that perspective.”

CCE routine inspection

Created on 13 November 2013

In recent months, the HK Customs & Excise Department (“CCE”) has been carrying out routine inspections on MSOs in different districts.  Based on various sources of information, the focus of the CCE includes the following:


  1. Are the Customer Due Diligence information complete and proper?
  2. Are the transaction records match with the bank statement records?
  3. Are the sources of funds reasonable?


We sincerely urge all MSOs to treat the compliance requirements of the relevant laws seriously and ensure all documents and records are kept properly.


If you have any questions about the above contents or relevant laws, please feel free to contact us by email at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone @ 3563 8766.

Mainlander charged with money laundering

Created on 16 October 2013

According to news on 4 October 2013, the HK Police arrested a man from the mainland and charged him for money laundering.  The mainlander lives in Sham Shui Po with a shell company located in Admiralty.  He is alleged to launder around $567 million over the period from June 2010 to Jun 2012 with the shall company’s bank account.  This case was discovered based on the investigation of another money laundering case.

Man admits laundering HK$95m in four years

Created on 18 September 2013

Chinese-Canadian used three different passports to open bank accounts

Thursday, 22 August, 2013, 3:52am


A Chinese-Canadian man admitted laundering more than HK$95 million over four years through bank accounts he had opened using three different passports.

Xie Jing-feng, also known as David Chow, 56, yesterday pleaded guilty in the District Court to one count of money laundering.

Prosecutor Leslie Parry told the court that Xie was born on the mainland. He entered Canada in 1997 as a refugee and was granted citizenship after five years. Xie and his wife, Zhu Li-chang, both hold Canadian passports.

Xie, who is not resident in Hong Kong, used a Canadian passport to open an integrated account at HSBC in June 2005, the court heard. The following year, he opened a savings account at Hang Seng Bank using a second Canadian passport that was also in his name but with a different number.

In May 2007, Xie produced a third Canadian passport to open two accounts at Standard Chartered Bank for his company, Civil Finance Limited. He stated that he was a director of the company.

Between June 2005 and April 2009, the court heard, Xie used the four accounts - along with five others that were held by his companies or wife - to launder more than HK$95 million.

No tax returns were submitted to the Inland Revenue Department by either Xie or his companies during this period.

Police began investigating Xie in 2008. He was jailed for eight months in November 2011 after being stopped at the mainland border for using a fake Malaysian passport. He pleaded guilty to the charge in Sha Tin Court.

After further investigation, Xie was arrested for money laundering when he was released from jail on April 30 last year. Judge David Dufton adjourned sentencing until today.

News source: SCMP 22 August 2013 -