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Hong Kong Consults On Beneficial Ownership Plans

Friday, January 13, 2017

Hong Kong's Financial Services and the Treasury Bureau (FSTB) has launched public consultations on legislative proposals to increase the transparency of corporate beneficial ownership in the city, and to enhance its regulatory regime for combating money laundering and terrorist financing.

The two legislative proposals are intended to bring Hong Kong's regulatory regime up to date with international requirements, as promulgated by the Financial Action Task Force (FATF).

According to a government spokesperson, "the proposals are pertinent to our fulfillment of the relevant FATF obligations. This will safeguard the integrity of Hong Kong as an international financial center, and add to our credibility as a trusted and competitive place to invest and do business."

The first proposal will amend Hong Kongs's Companies Ordinance to improve the transparency of beneficial ownership of companies incorporated in Hong Kong. It was said that "there are increasing international concerns over the misuse of companies, particularly those with complex ownership and control structures, as a way to … facilitate money laundering, or serve illicit purposes such as tax evasion, corruption, or terrorist financing."

It was also noted that the current law in Hong Kong "does not require a company to ascertain, keep or file information about [a company's] ultimate beneficial owner, except in the case of a listed corporation, which is required under the Securities and Futures Ordinance to keep a register of those individuals or entities owning five percent or more interests in any class of voting shares (including any beneficial owner of such interests)."

The FSTB therefore intends to amend the Companies Ordinance to require companies incorporated in Hong Kong to obtain and hold up-to-date beneficial ownership information for public inspection upon request. The requirement will apply to all companies incorporated in Hong Kong under the Companies Ordinance, including companies limited by shares, companies limited by guarantee, and unlimited companies.

A beneficial owner in relation to a company will be, for example, an individual who directly or indirectly holds more than 25 percent of its shares; directly or indirectly holds more than 25 percent of its voting rights; directly or indirectly holds the right to appoint or remove a majority of its directors; or otherwise has the right to exercise, or is actually exercising, significant influence or control.

For the purpose of keeping accurate and timely beneficial ownership information in accordance with the FATF recommendation, the FSTB also proposes that a company will be required to identify and keep a "register of people with significant control" over the company.

The second legislative proposal, to enhance Hong Kong's combating of money laundering and terrorist financing, will involve a regulatory extension of the current customer due diligence (CDD) and record-keeping requirements for financial institutions, also to designated non-financial businesses and professions.

It is therefore proposed to extend the scope of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance's CDD and record-keeping requirements to solicitors, accountants, real estate agents, and trust or company service providers, when they engage in specified transactions.

Public comments on either consultation are invited by the FSTB, to be received by March 5, 2017.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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