1. Introduction to the functions of Hong Kong TCSP license

The Hong Kong TCSP license, full name Trust or Company Service Provider License, is implemented in accordance with the provisions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO, Chapter 615) and aims to regulate companies and individuals that provide trust or company services in Hong Kong. The license will be issued from March 2018, 3.

Companies holding a TCSP license are entitled to provide services in Hong Kong including but not limited to the following:

  • company registration
  • Accounting
  • audit
  • Trademark registration
  • And other related services

TCSP licenses are generally divided into two types, Type 1 and Type 2:

  • Type 1：Mainly provide company registration, secretarial services, provision of registered office address and other services.
  • Type 2: Provide a wider range of services, which may include more complex corporate services such as audit, tax, trust, etc.

The main purpose of the TCSP license is to enforce the anti-money laundering act, requiring the licensee to take reasonable measures to reduce the risk of money laundering and terrorist financing and ensure compliance with the anti-money laundering and counter-terrorist financing regulations under AMLO.1. Licensees must assess the money laundering/terrorist financing risks of their businesses and formulate and implement corresponding policies, procedures and control measures, including but not limited to risk assessment, customer due diligence, continuous customer monitoring, suspicious transaction reporting, record keeping and employee training.

Violation of the Anti-Money Laundering Ordinance by operating a trust or company service business in Hong Kong without a license may result in fines and imprisonment1. Therefore, the TCSP license plays a key role in maintaining the integrity and stability of Hong Kong's financial markets and helps prevent the financial system from being used for illegal activities.

The TCSP license is issued by the Hong Kong Companies Registry and is an important tool for supervising companies engaged in providing trust or company services, ensuring the security and reliability of Hong Kong's financial markets.

2. Companies applying for a Hong Kong TCSP license need to meet the following basic eligibility requirements:

  1. There are two types of TCSP licenses in Hong Kong, Type 1 and Type 2. The basic eligibility requirements that each of them needs to meet are as follows:

    Type 1 License (Company Services)

    • Scope of services provided：Mainly provide company registration, secretarial, registered office address and other services.
    • Qualification requirements：Applicants need to have relevant professional knowledge, such as management, law, accounting or finance.
    • Good reputation: Applicants should have a good reputation and no bad record.
    • Suitable person：The applicant (or its partners/directors/ultimate owners) needs to be reviewed by the Hong Kong Companies Registry and confirmed as a fit and proper person.
    • Exempt candidates： Certain institutions or professionals, such as authorized institutions, licensed corporations, accounting professionals, legal professionals, etc., may not need to go through the fit and proper person assessment process.

    Type 2 License (Virtual Assets/Trust Services)

    • Scope of services provided: Provide a wider range of services, including auditing, taxation and other professional services.
    • Financial Capacity：Licensed virtual asset service providers need to have sufficient financial capabilities to operate virtual asset businesses, including paid-in capital requirements and liquid asset requirements.
    • Knowledge and experience：Licensed virtual asset service providers and their associated entities must have a good corporate governance structure, and their staff must have the necessary knowledge and experience to perform their duties effectively.
    • Segregation of client assets: Licensees are required to deposit client assets with associated entities and segregate the relevant assets. Licensees are also required to implement appropriate policies and governance procedures to properly manage and safeguard client assets (including virtual assets).

    Common requirements

    • Legal registration：The company must be a limited company under the laws of Hong Kong.
    • Qualifications of Directors: Company directors must have relevant qualifications and experience.
    • AMLO Compliance: TCSP licensees must take all reasonable steps to ensure compliance with the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) requirements set out by AMLO.
    • Licence validity period: The validity period of the license is generally 3 years and is stated on the license. If you need to continue to operate trust or company service business after the license expires, you must submit an application at least 60 days before the license expires.

3. When applying, you need to prepare a series of key documents and information, mainly including:

  1. When applying for a Hong Kong TCSP license, the key documents and information that need to be prepared mainly include:
    1. Company registration certificate: Prove that the company has been legally registered in Hong Kong.
    2. Directors and Senior Management Biographical Details: Including their professional background and experience.
    3. Business Plan: Set out in detail how the company will operate the trust or corporate services business.
    4. Financial Statements: Shows the company's financial status and liquidity.
    5. Confirmation of Compliance: Confirm that the company will comply with relevant laws, regulations and regulatory requirements.
    6. TCSP License Application Form：Contains a statement of appropriateness and a valid business registration certificate, etc.
    7. Risk management measures documentation: Describe how the company manages the risks it may face in its operations.
    8. Anti-Money Laundering and Counter-Terrorism Financing Policy: AML/CTF policies and procedures established by the company.
    9. Personnel list and resume: Includes a list and resume of licensed responsible officers (ROs) responsible for overseeing compliance in virtual asset businesses.
    10. Proof of registered capital: Proof that the company has met the paid-up share capital requirement, if applicable.
    11. Proof of registered address: Provide documentary proof of the company’s registered address, which must be a real and valid business address in Hong Kong.
    12. Legal Secretary Appointment Letter: According to Hong Kong law, a company is required to appoint a legal secretary.
    13. KYC Due Diligence Documents: Used to understand the identity and background of a company’s directors and shareholders.

4. What specific compliance and reporting requirements do companies holding a Hong Kong TCSP license need to comply with?

  1. Risk Assessment and Management: Firms must perform a thorough risk assessment and establish appropriate management policies, procedures, and controls to mitigate the risks associated with digital asset custody services.
  2. Customer asset segregation：Ensure the security and independence of customer digital assets, strictly isolate these assets from the company's own assets, and store them in designated customer accounts.
  3. Asset Protection: Responsible for ensuring that customers’ digital assets are adequately protected by establishing strong systems and controls to prevent loss, theft, fraud or unauthorized access.
  4. Delegation and Outsourcing: When choosing a partner to delegate or outsource hosting functions, it is important to conduct thorough due diligence and ensure that the client or service provider can provide a secure and reliable solution.
  5. risk disclosure: Fully and fairly disclose the custody arrangements to clients in a clear and understandable manner, including rights and obligations, custody arrangements, compensation arrangements, etc.
  6. Record keeping and reconciliation: Maintain appropriate books and records for each customer to track and record ownership of customer digital assets and perform regular reconciliations.
  7. Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT): Ensure that its AML/CFT policies, procedures and controls are able to effectively manage and mitigate the risks associated with digital asset custody activities.
  8. Continuous monitoring and auditing: Regularly review its policies and procedures and conduct independent audits of systems and controls and compliance.
  9. The right person：The applicant (or its partners/directors/ultimate owners) must submit relevant documents when applying for the registration office to determine whether the applicant complies with the requirements of the Anti-Money Laundering Regulations and whether the applicant is a fit and proper person.
  10. License renewal and maintenance: The license is valid for 3 years and the licensee must report to the Director when there is any change in information such as the business address.
  11. Suspension Request: The licensee must fill in a form before the closure date to inform the Director of the intention to suspend business and the closure date; failure to do so may constitute a crime and, upon conviction, may be fined.
  12. Continuing Responsibility：The licensee must cooperate with the Companies Registry and allow law enforcement officers to conduct inspections to determine whether the licensee has complied with the provisions of the Anti-Money Laundering Ordinance.

These requirements ensure that TCSP license holders can provide trust or company services in Hong Kong legally and in compliance with regulations, while maintaining the integrity of the financial market and the interests of consumers.

5. How to combine the TCSP license with the Virtual Asset Service Provider (VASP) license to comply with the requirements of the Securities and Futures Commission (SFC) of Hong Kong?

In order to comply with the requirements of the Hong Kong Securities and Futures Commission (SFC), the combination of a TCSP license and a Virtual Asset Service Provider (VASP) license can be achieved in the following ways:

  1. Compliance with the legal and regulatory framework：Ensure that all business activities comply with the Anti-Money Laundering and Counter-Terrorist Financing Regulations (AMLO) and relevant guidelines and regulations issued by the SFC.
  2. Compliance with licensing requirements: Virtual asset trading platforms need to hold both a VASP license and a TCSP trust license. This means,If the exchange holds customer funds and virtual assets in trust through its wholly-owned subsidiary, then the subsidiary must hold a TCSP license.
  3. Risk Management and Internal Control: Establish and implement appropriate management policies, procedures and controls to mitigate the risks associated with digital asset custody services while complying with relevant legal and regulatory frameworks31.
  4. Isolation and protection of customer assets：Ensure the security and independence of customer digital assets, strictly isolate these assets from the institution’s own assets, and store them in designated customer accounts.
  5. Commissioning and Outsourcing Policy: When entrusting or outsourcing custody functions, conduct thorough due diligence and ensure that the entrusting party or service provider can provide a safe and reliable solution while ensuring that the legal rights of client assets are not affected.
  6. Transparency and Disclosure: Fully and fairly disclose the custody arrangements to clients, including rights and obligations, custody arrangements, compensation arrangements, etc.
  7. Record keeping and reconciliation: Maintain appropriate books and records for each customer to track and record ownership of customer digital assets and perform regular reconciliations.
  8. Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT): Ensure that its AML/CFT policies, procedures and controls are able to effectively manage and mitigate any money laundering and terrorist financing risks associated with digital asset custody activities.
  9. Continuous monitoring and auditing: Regularly review its policies and procedures and conduct independent audits of its systems and controls and compliance with applicable requirements with respect to the custody of customer digital assets.

Through the above measures, it can be ensured that the combination of TCSP license and VASP license not only complies with SFC regulations, but also provides high standards of customer asset protection and transparent business operations, thereby enhancing investors' confidence in virtual asset services. (For details, please refer to:Hong Kong Virtual Asset Trading Platform License VASP Application）

6. What is the connection between the trust model and opening a VA account?

answer: Opening a "VA account" (usually referring to a bank account related to virtual asset business) is a key link in the virtual asset OTC business, and the trust model and TCSP license play the following roles:
  • Bank compliance requirements :
    • Banks in Hong Kong (such as HSBC, Standard Chartered or virtual banks) have extremely strict reviews on the opening of accounts for virtual asset businesses and require companies to prove that their businesses comply with AML/CTF requirements. TCSP license holders are regulated by the Company Registry and have standardized CDD and record keeping processes to meet the compliance thresholds of banks.
    • The trust model provides a clear asset separation mechanism (customer assets are separated from corporate assets), reduces banks’ concerns about money laundering or misuse of funds, and helps companies obtain approval for VA accounts.
  • Operational advantages of the trust model :
    • In OTC transactions, the trust model allows TCSP licensees to act as trustees and hold clients’ virtual assets or fiat currencies until the transaction is completed. This model requires a bank account to process fiat currency settlements (such as customers depositing Hong Kong dollars to buy Bitcoin).
    • Banks prefer to open VA accounts for companies with TCSP licenses because their business model (custodial rather than trading) is relatively low-risk and is regulated by AMLO.
  • Functions of VA account :
    • VA accounts are used to receive customers’ fiat currency deposits, pay transaction amounts, or process fund flows related to virtual asset exchanges.
    • For example, an OTC client may deposit Hong Kong dollars into the VA account of a TCSP licensee, who holds the funds in a trust model and then arranges for virtual assets (such as USDT) to be transferred to the client’s wallet.
  • Market phenomenon :
    • Due to the high threshold for applying for a VASP license, some OTC service providers choose to obtain a TCSP license first, operate custody services through a trust model, and quickly obtain a bank VA account to conduct business. Subsequently, a VASP license will be applied for to cover trading activities.
    • The SFC’s statement on the JPEX case in 2023 showed that it is difficult for unlicensed virtual asset businesses to open bank accounts, which indirectly promoted the application of TCSP licenses in OTC business.
challenge: Even if operating in a trust model, banks may still refuse to open accounts due to the high-risk nature of virtual assets. TCSP licensees need to prepare detailed compliance documents (such as AML/CTF policies, transaction records) to increase the success rate.

Application Steps Guide

  • TCSP License :

    • Application：Set up or manage a trust, provide company registration agent, company secretary, director/shareholder services, or provide registered address, etc.
    • regulatory agency：Hong Kong Companies Registry (Companies Registry).
    • Legal basis: The Anti-Money Laundering and Counter-Terrorist Financing Regulations (AMLO) and the Trustees Regulations (if a specialised trust company is involved).
    • Exempt: Licensed accountants or lawyers may be exempt from applying in certain circumstances, but confirmation is required.

  • VASP License (Hosting Services) :

    • Application: Holding, storing or managing virtual assets (such as cryptocurrencies) for customers, including cold/hot storage facilities.
    • regulatory agency: Securities and Futures Commission of Hong Kong (SFC).
    • Legal basis: AMLO (revised in June 2023) and SFC "Guidelines on Virtual Asset Trading Platforms".
    • Suitable: Companies operating virtual asset custody services in Hong Kong or promoting them to the Hong Kong public.
    • Exempt: Providing internal hosting services only to affiliated companies may be exempt from application, but needs to be confirmed on a case-by-case basis.

  • Combined with the situation :

    • If the custody service is operated in the form of a trust (such as holding client virtual assets in a trust), it is necessary to apply for both TCSP and VASP licenses.
    • Both are subject to AMLO's anti-money laundering (AML) and counter-terrorist financing (CTF) requirements, and compliance policies can be partially shared, but VASPs have higher requirements for technology and asset protection.
There is some overlap in the application materials for the two types of licenses, but VASP requirements are more stringent, especially in terms of technology and capital. Here is a comprehensive list:

  • Common Materials :

    • Company information :
      • Business registration certificate and company registration certificate of a company registered in Hong Kong (overseas companies need to set up subsidiaries or branches in Hong Kong).
      • Articles of Association, shareholder structure and identification of the Ultimate Beneficial Owner (UBO) (e.g. passport, Hong Kong identity card).
      • Proof of local operating address in Hong Kong (e.g. lease agreement).
    • Anti-Money Laundering and Compliance Policy :
      • Customer Due Diligence (CDD), ongoing monitoring and suspicious transaction reporting (STR) procedures.
      • Record keeping policy (TCSP at least 6 years, VASP must comply with SFC guidelines).
      • AML/CTF training program for employees.
      • Refer to the AMLO Guidelines and the SFC's Anti-Money Laundering and Counter-Terrorism Financing Guidelines (June 2023).
    • Person in charge information :
      • Resumes, criminal records and qualifications of senior management and compliance officers.
      • To prove that they are "fit and proper", TCSP requirements are more relaxed. VASPs need at least two "responsible officers" approved by the SFC.
    • financial information :
      • Recent financial statements or audit reports demonstrating financial soundness.
      • Proof of liquid capital (higher requirements for VASPs, see below).

  • TCSP Specific Materials :

    • Application form: TCSP application form provided by the Companies Registry (tcsp.cr.gov.hk).
    • Business Plan: Detailed description of the nature of the trust or company's services, target customers and operating model.
    • Trust company requirements (if applicable) :
      • Proof of deposit of not less than HK$300 million (certificate issued by the bank).
      • Meet the requirements of the Trustee Ordinance and only apply for non-private companies.

  • VASP Specific Materials :

    • Application form: VASP application form provided by SFC (sfc.hk).
    • Business Plan :
      • Managed service operation model (cold/hot storage ratio, technical solutions).
      • Target customers (professional investors or retail investors) and types of virtual assets.
    • Asset protection measures :
      • At least 98% of customers’ virtual assets are stored in cold storage.
      • Insurance or indemnity arrangements covering 50% of potential losses for cold storage assets and 100% of potential losses for hot storage assets.
      • Separation of client assets from company assets (e.g. trust arrangements or separate wallet addresses).
      • Use technologies such as hardware security modules (HSM), key sharding, etc.
    • Technology and Cybersecurity Program :
      • Firewalls, intrusion detection systems, and smart contract auditing programs.
      • Proof of private key storage and backup security (seed phrases and private key backups must be stored locally in Hong Kong).
    • Capital requirements :
      • Minimum paid-up capital: HK$500 million (approximately US$64).
      • Liquid capital: at least HK$300 million (approximately US$38).
      • Current assets cover 12 months of operating expenses (excluding virtual assets).
    • Travel Rule Compliance：Comply with FATF "Travel Rule" to ensure that the identity information of both parties to the transaction can be traced.
    • Bank cooperation: Proof of cooperation with local banks (because banks are prudent towards virtual asset business).

  • Combined with attention :

    • If applied for at the same time, AML/CTF policies can be shared, but travel rules and cybersecurity content must be supplemented for virtual asset businesses.
    • The capital and technical requirements of VASP are much higher than those of TCSP and must be met first.
    • If the custody involves a trust, the TCSP’s trust deposit certificate can be integrated with the VASP’s asset protection measures.

  • TCSP :

    • Submission method: In person or by mail to the Trust and Company Service Providers Registration Office of the Hong Kong Companies Registry (Room 1, 12/F, One Kowloon, 1208 Wang Yuen Street, Kowloon Bay, Hong Kong), or through the online system (tcsp.cr.gov.hk).
    • cost: Thousands of Hong Kong dollars (please refer to tcsp.cr.gov.hk for details).
    • processing time: About 3-6 months.

  • VASP :

    • Submission method: Through the SFC Online System (WINGS) or by post to the SFC Office (54/F, One Pacific Place, 35 Queen's Road Central, Central, Hong Kong).
    • cost: Thousands to tens of thousands of Hong Kong dollars (depending on the application type, refer to sfc.hk).
    • processing time: 12-18 months (as it involves on-site inspection).

  • Combining strategies :

    • Aiying recommends applying for a TCSP license first (faster approval), and then applying for a VASP license to ensure business compliance.
    • They can be submitted at the same time, but the business scope and compliance measures of the two must be clearly distinguished to avoid confusion during the review.
    • Communicate with the SFC and the Companies Registry in advance to confirm whether simultaneous approval is possible.

  • Joint review :

    • background check： Carry out “fit and proper person” assessment on shareholders, directors, responsible officers and UBOs to ensure they have no criminal record and professional competence.
    • Compliance Review: Check AML/CTF policies, record keeping and suspicious transaction reporting mechanisms.
    • Interview (if necessary): Clarify business or technical details.

  • TCSP specific review :

    • The Companies Registry focuses on reviewing the compliance and financial soundness of trust or company services.
    • If a trust company is involved, additional proof (such as proof of deposit) may be required.

  • VASP-Specific Review :

    • On-site inspection：SFC conducts on-site inspections of Hong Kong operating locations to review technical facilities, cybersecurity and asset protection measures.
    • technical review: Ensure cold storage ratio, private key security and travel rule compliance.
    • Customer Restrictions: Confirm whether it only serves professional investors (with asset portfolio exceeding HK$800 million).

  • Combined with attention :

    • VASPs are subject to stricter scrutiny and need to be prepared to respond to on-site inspections and technical inquiries from the SFC.
    • TCSP review is relatively simple, but if it involves virtual asset trusts, it needs to be aligned with VASP requirements.

  • TCSP :

    • After approval, a TCSP license will be issued and made public at data.gov.hk.
    • There is no fixed term, and business registration needs to be renewed every year.
    • There may be conditions attached, such as the submission of regular compliance reports.

  • VASP :

    • A VASP license will be issued upon approval and will be made public on sfc.hk and data.gov.hk.
    • There is no fixed term, but business registration must be renewed annually and subject to SFC supervision.
    • Conditions include cold storage ratios, retail investor restrictions and regular audits.

  • Combined with the situation :

    • Both licenses can be held at the same time. If the VASP licensee holds the assets in trust, he or she must ensure that the TCSP is compliant.
    • Licensing conditions may require separate management of trust business and virtual asset business.

  • Common requirements :

    • AML/CTF: Regularly update CDD, monitor transactions, and report suspicious activities.
    • record keeping: TCSP must be at least 6 years, and VASP must comply with SFC guidelines.
    • training: Employees are required to receive AML/CTF and compliance training.
    • Regulatory inspections：Accept irregular inspections by the Companies Registry (TCSP) and SFC (VASP).

  • TCSP Specific Requirements :

    • Ensure trust or company services comply with AMLO guidelines.
    • If it is a trust company, maintain a deposit of HK$300 million.

  • VASP-Specific Requirements :

    • Asset protection: Maintain a 98% cold storage ratio and insurance/compensation arrangements, and separate customer assets from company assets.
    • cyber security: Regularly conduct smart contract audits and vulnerability tests to ensure the security of private keys.
    • Travel rules: Ensure that transaction information is traceable.
    • report: Submit annual reports every year and report major incidents (such as cyber attacks) immediately.

  • Combined with attention :

    • Compliance systems can be integrated (such as a unified CDD process), but VASPs will need to meet additional technical and travel rule requirements.
    • It is recommended to set up a dedicated virtual asset compliance team and manage it separately from the trust business.
Item
TCSP License
VASP License (Hosting)
regulatory agency
Hong Kong Companies Registry
Hong Kong Securities and Futures Commission (SFC)
Legal basis
AMLO, Trustee Ordinance
AMLO, SFC Guidance (June 2023)
Capital requirements
Trust companies require a HK$300 million deposit, but TCSP has no clear requirements
HK$500 million paid-up capital + HK$300 million working capital
skills requirement
No specific requirements
98% cold storage, HSM, network security audit
Application Fee
Thousands of Hong Kong dollars
Thousands to tens of thousands of Hong Kong dollars
processing time
3-6 months
12-18 months
Main challenges
AML/CTF compliance, financial proof
Technical security, capital requirements, bank cooperation

  • Combining challenges :

    • Capital and cost: VASP’s HK$500 million equity and technology investment far exceeds TCSP requirements, and the total cost (including advisory fees) may reach millions of Hong Kong dollars.
    • Technical preparation：VASP needs to invest in cold storage facilities, HSM and insurance. TCSP does not have this requirement, but if it involves virtual asset trusts, it must align with VASP standards.
    • Approval time: VASP approval takes a long time (12-18 months), so it is recommended to obtain a TCSP license first to conduct some business.
    • Banking Relationships：VASP needs to cooperate with local banks, TCSP does not have this rigid requirement, but virtual asset business may affect bank approval.
  • retail investor：VASP mainly serves professional investors (assets exceeding HK$800 million), while TCSP has no such restriction.
  • New Developments :
    • The SFC plans to launch a dedicated virtual asset custody license in 2025, with details to be announced.
    • HKMA’s stablecoin regulatory framework (expected to take effect in 2025) may affect custody business and requires close attention.

Application timetable

TCSP and VASP license application timeline

Stairs TCSP VASP Combined (simultaneous application)
ready 3-4 months

– Company establishment (1-2 weeks)

– Company information, AML/CTF policy

– Financial proof (trust company requires a deposit of HK$300 million)

– Application form

 6-9 months

– Set up a company, negotiate with SFC and banks

– AML/CTF Policy (including Travel Rule)

– Cold storage (98%), HSM, insurance

– Capital (HK$500 million share capital + HK$300 million working capital)

 6-9 months

– Shared company information, AML/CTF policies

– VASP technology and bank cooperation are bottlenecks
Approval 3-6 months

– Submit application (costs several thousand Hong Kong dollars)

– Background and compliance checks

– Supplementary materials (if necessary)

 12-18 months

– Submit application (costs from thousands to tens of thousands of Hong Kong dollars)

– Background, compliance and technical review

– On-site inspection (cold storage, private key security)

 12-18 months

– TCSP approval first (6-10 months)

– Total time VASP dominates
Total 6-10 months 18-27 months

(1.5-2.25)

 18-27 months

– Can be shortened to 18-24 months in stages (if preparation is done simultaneously)
Finished earliest 6 months 18 months 18 months (TCSP first)

Key influencing factors

factor TCSP VASP Combine
Prepare for bottlenecks AML/CTF policy, financial proof Cold storage, insurance (6-9 months), bank cooperation (3-6 months) VASP technology and bank cooperation
Approval bottleneck Completeness of materials (1-2 months delay) On-site inspection, technical review (3-6 months delay) VASP approval-led
Cost/Capital Trust company requires HK$300 million deposit HK$500 million equity + technology investment VASPs have higher requirements

License Acquisition Process and Timetable

Stairs TCSP VASP Combine (simultaneous acquisition) Time Main costs
Demand analysis and market search – Confirm business needs (trust, company services)

- Search for licensed companies (search at tcsp.cr.gov.hk)

– Evaluate financial and customer base

 – Confirm hosting business needs (cold/hot storage)

– Search for VASP licensed companies (search on sfc.hk)

– Evaluate technology and banking relationships

 – Integrate TCSP and VASP requirements

– Prioritize VASP lock-in (scarce supply)

 1-2 months Consultancy fee: HK$5-20
due diligence – Legal: license compliance, company charter

– Financial: No hidden debt

– Operations: AML/CTF policies, CDD records

 – Legal: License compliance, no SFC penalties

– Finance: HK$500 million share capital, HK$300 million working capital

– Operations: cold storage (98%), insurance, travel rules

 – Shared legal and financial due diligence

– Stricter technical review of VASP

 1-2 months Due diligence fee: HK$10-30
Negotiation and deal structuring – Estimated value: HK$50-200 million

– Mainly equity acquisition

– Notify the Companies Registry of changes in shareholders

 – Estimated value: HK$500-2000 million

– Equity acquisition, SFC approval of new shareholders

– Confirmation of technology asset transfer

 – Unified negotiation, higher costs for VASPs

- Notify the Companies Registry and SFC simultaneously

 1-2 months Transaction cost: TCSP HK$50-200 million

VASP HK$500 million - HK$2000 million
Regulatory Approvals and Changes - Submit shareholder/director changes (costs several thousand Hong Kong dollars)

- Provide a clean criminal record and resume

– Companies Registry Review

 – Submit shareholder/UBO/responsible officer changes (costs range from thousands to tens of thousands of Hong Kong dollars)

- SFC approval of "fit and proper person"

– Possible on-site inspection of technical facilities

 – TCSP approval is faster

– VASP approval lead time

 1-3 months

(TCSP 1-2 months, VASP 2-3 months)

 Application fee: TCSP several thousand Hong Kong dollars

VASP Thousands to tens of thousands of Hong Kong dollars
Transaction completion and handover – Settle payments and update company registration

– Receive customer information and compliance records

– Ensure ongoing AML/CTF compliance

 - Settle payments and update SFC records

– Receiving cold storage and technical systems

– Confirm bank account, travel rule compliance

 – Integration and handover, key to VASP technology transfer

– Unified training and compliance system

 0.5-1 months Handover fee: HK$5-20

Total timetable and comparison

Item TCSP VASP Combine (Synchronize)
Total time 5.5-9 months 6.5-10 months 6.5-10 months
New Application Comparison 6-10 months 18-27 months 18-27 months
Finished earliest 5.5 months 6.5 months 6.5 months (VASP-dominated)

Key considerations

Item TCSP VASP Combine
regulatory risk Confirm no violation record SFC strictly examines new shareholders and technologies, with no record of penalties Stricter scrutiny of VASPs
skills requirement No specific requirements 98% cold storage, HSM, insurance, travel rule Key points for VASP technology handover
financial cost HK$50-200 HK$500-2000 VASP cost dominance
Banking Relationships No rigid requirements Requires local bank support and transfer needs to be reviewed VASP banking relationships pose great challenges
market supply More licensed companies Scarcity of licensed companies (only 2024 in 11) Prioritize VASP

Customer service type

Based on the client's actual background and business needs, Aiying will have an in-depth understanding of the client's business model and needs, and tailor a unique application strategy and solution to ensure that each service perfectly matches the client's personalized needs.

Asset Management Institutions

Asset Manager

Lending Institutions

loan provider

Exchange

cryptocurrency exchange

Crypto Custody

crypto custody

Brokerage Institutions

broker-dealer

OTC institutions

OTC provider

License Case

business planning

Conducting overseas financial business requires comprehensive planning

Corporate Framework

資金
  • Total treasury requirements
  • Liquidity requirements
  • Regulatory agencies’ external requirements
  • Are the funds already overseas?
Background of shareholders and directors
  • Suitable person
  • Industry background
  • Reputation and qualifications
  • Do Hong Kong/offshore license companies need to increase?
Professionals
  • Company person in charge
  • Professional staff (RO)
  • Other financial professionals: sales, compliance, settlement, etc.
  • Do the personnel match the business needs?
Office location
  • Business Location
  • Separation of front office, back office and back office in compliance with regulatory requirements
  • Connections to exchanges
  • Purchase office furniture

Corporate Compliance

license
  • What is the operating area itself?
  • The various laws and regulations that media business must comply with and the Securities and Futures Commission
  • Various periodic and prudent declarations

! The Jingbiantong team will assist customers in making the most appropriate plans and provide corresponding services in various fields according to their actual background and business needs.

我們的團隊

Director and Founder

▶ Honorary Fellow of Hong Kong Baptist University
▶ Served as executive director and independent non-executive director of several listed companies
▶ Manage the regulated business of comprehensive financial enterprises (listed and unlisted):
-Securities business (CSRC No. 1 license)
-Futures business (CSRC license No. 2)
-Investment Banking Business (China Securities Regulatory Commission License No. 6)
-Asset management business (CSRC license No. 4 and 9)
-Insurance Brokerage Business (PIBA Member)
-Money Lending Business (Money Lenders Licence)
▶ Served as the head of the legal and compliance department of a listed financial company, dealing with different regulatory agencies

Director and Founder

▶ Bachelor of Science, Master of Business Administration, Master of Financial Engineering, Hong Kong University of Science and Technology
▶ Long-term management of regulated businesses of comprehensive financial enterprises:
-Securities business (CSRC No. 1 license)
-Futures investment business (CSRC license No. 2, 5)
-Investment Banking Business (China Securities Regulatory Commission License No. 6)
-Automated Trading (CSRC License No. 7)
-Asset management business (CSRC license No. 4 and 9)
-Insurance Brokerage Business (IA Member)
-Money Lending Business (Money Lenders Licence)
▶ He has over 15 years of experience in asset management, investment research and compliance management and is a senior consultant in the industry.

General Manager

Bachelor of Arts from the Chinese University of Hong Kong, Master of Social Sciences in Communication from the Chinese University of Hong Kong, Master of Professional Accounting and Corporate Governance from the City University of Hong Kong.
She is a member of the Hong Kong Institute of Corporate Governance and the Institute of Chartered Secretaries and Administrators in the United Kingdom, and possesses the professional qualifications of Chartered Secretary (CS) and Corporate Governance (ACG).
Active in the compliance industry for over ten years.

Senior Vice President

Master of Finance from the Hong Kong Polytechnic University. Chartered Financial Analyst (CFA) charterholder.
He has nearly ten years of experience in the Hong Kong securities and asset management industry, managing assets worth over HK$30 billion.
Possess the qualification of Responsible Officer (RO) of a licensed company. Familiar with the products and compliance operations of Hong Kong securities firms and asset management companies.

Vice President

Bachelor of Science from the University of Hong Kong. With nearly ten years of experience in applying for various financial-related licenses and establishing software and hardware supporting facilities,
The clients we have served are located in many regions around the world, spanning different backgrounds, and their licensing needs are comprehensive and complex.

※ The list of professional team members is not exhaustive. There is also an advisory team including professional accountants from licensed institutions, lawyers, and former management members of regulatory agencies.

🏆 The team is more than 100 Different types of financial licenses provide various compliance-related services. Including but not limited to:

-State-owned enterprise group affiliated companies
-Subsidiary of China's Top 500 Private Enterprises
-Subsidiaries of major domestic real estate developers
-Hong Kong Main Board listed financial group

-Former fund manager of a large investment bank
-Algorithmic Trading Hedge Fund Firms
-Fin-tech companies under listed technology companies
-Top domestic law firms

🏆 The founder has managed listed financial companies and handled securities regulatory affairs.experienceRich, other team members have practical management and operation experience in well-known financial industries,Practical operationlevelWe provide feasible compliance ideas and compliance solutions to help customers develop their business.

🏆 The team has served mainland enterprises and entrepreneurs for many years.FamiliarDomestic conditions and customer needs, can assist customersadaptThere are many differences between the two places in terms of culture, supervision, system, business environment, etc.

FAQs

According to Hong Kong's Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and related regulatory requirements, TCSP (Trust or Company Service Provider) licensees are required to keep the following records:

  1. Customer due diligence records: Including the customer’s identity information, account information, and source of funds.
  2. Transaction Record: All documents and communications related to customer transactions.
  3. Risk Assessment Document: Includes assessment report on money laundering and terrorist financing risks.
  4. Suspicious Transaction Report: Internal reports and related records of any suspicious transaction activities.
  5. Internal audit and compliance review records: Includes internal audit reports and documentation of compliance checks.
  6. Financial Records: Financial statements and books related to business operations.
  7. Communication records: Records of all communications with clients, including emails, letters, and meeting minutes.
  8. Licence and Registration Documents: Includes a copy of the TCSP licence and any relevant registration documents.
  9. Staff training and awareness raising records: Records of anti-money laundering and counter-terrorist financing training attended by employees.
  10. Policy and Procedure Documents: Documentation of the AML/CTF policies and procedures established by the company.

Regarding the retention period of records, generally these records need to be retained for the minimum period prescribed by Hong Kong law, which may be up to several years. The specific period may depend on the specific requirements of different types of records and regulatory authorities. For example, some financial records may need to be kept for five years or longer

If a Hong Kong TCSP licensee needs to transfer their license or cease operations, they need to follow the following procedures:

  1. License transfer：If a licensee plans to transfer his license, he must ensure that the recipient meets all eligibility requirements and complies with the relevant procedures and regulations of the Hong Kong Companies Registry.
  2. notify in advance: If a licensee intends to cease business, he must submit a written notice to the Companies Registry before the date of cessation, stating his intention to cease business and the date of cessation.
  3. Renewal of licence: The validity period of a TCSP license is generally 3 years. If the license holder needs to continue to operate a trust or company service business after the expiration of the license, he or she must apply for renewal at least 60 days before the expiration of the license.
  4. License expiration processing: If the license is valid for less than 60 days when the license renewal application is submitted, the application will not be accepted by the Registry and the licensee will need to reapply for a new TCSP license.
  5. Compliance Review: Before transferring a licence or ceasing business, the licensee may need to undergo a compliance review by the Companies Registry to ensure that there are no unresolved compliance issues or unfulfilled regulatory requirements.
  6. Financial Settlement：The licensee must ensure that all financial matters have been properly handled before the license is transferred or the business is closed, including the return of client funds and the settlement of company debts.
  7. Record keeping: Even after ceasing business, licensees are required to keep relevant business records for a certain number of years in accordance with regulations in case of possible future regulatory review or legal requirements.
  8. Disciplinary and Legal Consequences: If a licensee fails to comply with relevant procedures and regulations, he or she may face disciplinary action, including suspension, revocation or non-renewal of the licence, and in serious cases, he or she may face legal prosecution.

The fees required to apply for a Hong Kong TCSP license mainly include:

  1. Application fee: When submitting an application for a TCSP license, you need to pay a certain application fee. According to the search results, the fee is generally between HK$10,000 and HK$20,000.
  2. annual fee: TCSP license holders may be required to pay an annual fee to maintain the validity of the license. The specific amount of annual fees may be determined according to the relevant regulations of the Hong Kong Companies Registry.
  3. Registered capital: According to the Trustee Ordinance, a corporation that wishes to be registered as a trust company must have an issued share capital of not less than HK$3,000,000 and at least the same amount must be paid in cash.
  4. Other costs: Other costs associated with the application process may also be included, such as legal counsel fees, audit fees, costs of preparing and submitting documents, etc.
  1. fine: Under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), any person who carries on a trust or company service business in Hong Kong without a permit is liable upon conviction to a fine of up to HK$100,00024.
  2. imprisonment: In addition to a fine, you may also face up to 6 months in prison.
  3. Revocation of licence：Licensed persons who violate the regulations may face the risk of having their licences revoked, resulting in their inability to continue to provide trust or company services in Hong Kong.
  4. Business restrictions: Individuals or companies that violate the regulations may face restrictions on their business operations, affecting their market reputation and customer relationships.
  5. Legal proceedings: May be subject to legal action, particularly if their actions result in losses for their clients or damage to third parties.
  6. Regulatory review: Violations of the regulations will be subject to regulatory review by the Hong Kong Companies Registry and may result in further legal and regulatory action.
  7. Additional compliance costs: To correct violations, licensees may need to devote additional resources to strengthen compliance measures, which may increase operating costs.
  8. Reputational loss: Violation of TCSP license regulations can seriously damage a company’s reputation and affect its relationships with customers, partners and investors.

In Hong Kong's anti-money laundering legal framework, in addition to core regulations such as the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and the Banking Ordinance, there are other relevant legal documents and international standards, which together constitute a comprehensive regulatory system. This includes but is not limited to:

  1. United Nations (Anti-Terrorism Measures) Regulations: The ordinance reflects Hong Kong's commitment to implementing United Nations counter-terrorism measures.
  2. United Nations Sanctions Regulations: This regulation involves the implementation of United Nations financial sanctions and is part of the anti-money laundering legal framework.
  3. Weapons of Mass Destruction (Control of Provision of Services) Regulations: While this regulation primarily regulates the provision of services related to weapons of mass destruction, it may also be relevant to anti-money laundering and counter-terrorist financing measures as these activities may involve illicit financial flows.
  4. Travel Rules: Proposed by the Financial Action Task Force (FATF), it requires financial institutions to pass on information about senders and receivers when transferring funds across borders. As a member of FATF, Hong Kong's financial institutions are subject to this rule, and although it may not be a specific local law, it has important implications for Hong Kong's anti-money laundering regulations.
  5. Statutory guidelines: Issued by the Hong Kong Monetary Authority (HKMA) to provide financial institutions with specific operational guidance to help them comply with AMLO and other relevant regulations.
  6. Circulars and Guidance Documents: Circulars and guidance documents issued by the HKMA to provide financial institutions with detailed guidance on how to implement effective anti-money laundering measures.

These documents and rules play an important role in Hong Kong's anti-money laundering legal framework, ensuring that financial institutions comply with international standards and local regulations in their operations. While they may not directly constitute legal obligations like AMLO, they provide the necessary guidance and framework for financial institutions to ensure compliance.

The regulatory authorities under the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) in Hong Kong mainly include the following:

  1. Hong Kong Monetary Authority (HKMA) – Responsible for the supervision of the banking industry. The HKMA ensures that the banking system complies with anti-money laundering and counter-terrorist financing regulations, conducts customer due diligence, record keeping and reporting of suspicious transactions, among other activities.
  2. Securities and Futures Commission (SFC) – Responsible for the supervision of securities and futures markets. The SFC develops and implements relevant codes and guidelines to ensure that institutions under its supervision comply with legal requirements on anti-money laundering and counter-terrorist financing.
  3. Insurance Authority (IA) – Responsible for regulating the insurance industry. The IA ensures that insurance companies and their agents and brokers comply with regulations and measures related to anti-money laundering and counter-terrorist financing.
  4. Customs and Excise Department (C&ED) – Although primarily responsible for customs and excise duties, it also plays a role in the anti-money laundering framework, particularly monitoring money laundering risks in precious metals and gemstone transactions.

These regulatory agencies will coordinate and cooperate to jointly build a unified regulatory framework to improve regulatory efficiency and effectiveness. Through this division of labor and cooperation regulatory model, Hong Kong ensures the transparency and security of its financial markets, providing confidence for local and international investors.

  • Applicants required :
    • Any individual, partnership or company carrying on or planning to carry on TCSP business in Hong Kong unless exempted.
    • Applicants must hold a valid business registration certificate.
  • Exemptions(Article 53B of the AMLO):
    • government;
    • an authorized institution as defined in the Banking Ordinance (Cap. 155);
    • A licensed corporation as defined in the Securities and Futures Ordinance (Cap. 571) whose TCSP business is ancillary to its principal business;
    • Accounting professionals (including registered accountants, certified public accountants, accounting firms, etc. as defined in the Professional Accountants Ordinance or the Accounting and Financial Reporting Council Ordinance);
    • a legal professional (a lawyer or foreign lawyer as defined in the Legal Practitioners Ordinance);
    • Other exemptions specified by the Secretary for Financial Services and the Treasury.
  • important hint :
    • Subsidiaries of authorized institutions or licensed companies are not exempt and must apply for a licence.
    • Accounting or legal professionals are exempt from licensing when operating a TCSP business as a sole proprietorship or a partnership consisting entirely of professionals, but they are still required to comply with AMLO's customer due diligence and recordkeeping requirements.
  • Suitable :
    • The applicant (sole proprietor, partner in a partnership, director of a company);
    • The ultimate owner.
  • Exemptions :
    • Accounting professionals (CPAs, etc.);
    • Legal professionals (lawyers or foreign lawyers).
    • Exempt persons are required to submit supporting documents (such as professional qualification certificates) but do not need to submit Form TCSP4/TCSP5.
  • Test Standards(Article 53I AMLO):
    • Do you have any criminal record of:
      1. AMLO related offences;
      2. Terrorist activities, drug trafficking, or organized/serious crime;
      3. Money laundering, terrorist financing, or crimes involving fraud, corruption or dishonesty outside Hong Kong.
    • Whether there is any violation of the requirements set by AMLO or the Registrar of Companies;
    • Whether the individual is an undischarged bankrupt or is undergoing bankruptcy proceedings;
    • Whether the company is in liquidation or has a receiver appointed.
  • as a result of :
    • If you fail to pass the test, your licence application may be rejected or you may not be able to become an ultimate owner/partner/director.
According to Article 53A of AMLO, the ultimate owner must be an individual who meets one of the following conditions:
  • Sole Proprietorship: Another person who ultimately owns or controls the business of TCSP, or another person acting on its behalf.
  • partnership :
    • Directly or indirectly holds more than 25% of the capital or profits;
    • Controls more than 25% of the capital or profits;
    • Has the right to exercise or control the exercise of more than 25% of the voting rights;
    • Exercise ultimate control over the management of the partnership.
  • Company :
    • owns or controls, directly or indirectly (including through a trust or bearer shares), more than 25% of the issued share capital;
    • Has the right to exercise or control the exercise of more than 25% of the voting rights at shareholders' meetings;
    • Exercise ultimate control over the management of the company.
  • Important clarification: The holding company itself is not the ultimate owner and must be traced back to individuals who meet the above conditions.

Yes, a TCSP license may be applicable to certain virtual currency-related services, especially those involving a trust model. For example, companies that provide virtual asset custodial services may need to apply for a TCSP license because such services may involve "acting as a trustee of an express trust" or "providing corporate services" (such as providing a registered office or nominee shareholders for virtual asset-related companies). For example, Hippo Financial Services Limited, a Hong Kong subsidiary of Gate.io Group, obtained a TCSP license in 2022 to provide virtual asset custody services.

important hint :

  • If the virtual currency business involves a virtual asset trading platform (VATP), it is necessary to apply for the SFC's VASP license in accordance with the Anti-Money Laundering and Anti-Terrorism Financing Ordinance (AMLO) instead of relying solely on the TCSP license.

  • The scope of application of the TCSP license and the VASP license is different: the TCSP license is mainly for trust and corporate services, while the VASP license is for activities such as virtual asset transactions, transfers or custody.
TCSP licensees involved in virtual currency business must comply with the customer due diligence (CDD) and record-keeping requirements of Schedule 2 of AMLO, which apply uniformly to all TCSP licensees. Additional considerations for virtual currency businesses include:

  • Enhanced Customer Due Diligence: For transactions involving virtual assets, technology or third-party services are required to identify high-risk situations, such as transactions involving darknet wallet addresses, highly anonymous virtual assets, or using proxy/high-risk IP addresses.

  • Travel Rule：If the business involves the transfer of virtual assets, it is necessary to collect and provide key information (such as the identities of both parties to the transaction) for sanctions screening and transaction monitoring, which is consistent with the AML/CTF requirements of VASPs.

  • risk assessment: TCSP licensees are required to conduct risk assessments on virtual currency-related customers and implement corresponding monitoring measures, such as reporting suspicious transactions.

as a result of: Violation of AML/CTF requirements may result in disciplinary action by the Companies Registry (such as public reprimand, fine of up to HK$50) or revocation of the licence.
The TCSP license itself does not directly require investor protection measures (such as token disclosure or customer asset segregation required by the VASP license), but TCSP businesses involving virtual currencies need to pay special attention to:

  • Customer asset security: If you provide virtual asset custody, you need to ensure that the trust structure complies with AMLO’s CDD and record-keeping requirements, and take technical measures to protect customer assets (such as preventing hacker attacks).

  • Risk Disclosure: Although TCSP licensees are not required to disclose token risks to investors like VATP, it is recommended to proactively inform customers of the volatility and AML/CTF risks of virtual assets in order to comply with industry best practices.

  • SFC Guidelines Reference: If the TCSP business is associated with VATP (such as providing trust services for VATP), it is necessary to refer to the SFC’s “Guidelines for Virtual Asset Trading Platform Operators” to ensure that customer asset holding requirements are met.
Yes, but it depends on the nature of the business:

  • TCSP related business: If the stablecoin business involves trust services (such as custody of stablecoin assets) or corporate services (such as providing a registered office for a stablecoin issuing company), a TCSP license is required.

  • Stablecoin Regulation：The Hong Kong Monetary Authority (HKMA) plans to launch a stablecoin regulatory framework in 26 years, imposing mandatory licensing requirements for issuance, governance and wallet services. If a stablecoin meets the definition of a stored value facility (SVF) under the Payment Systems and Stored Value Facilities Ordinance (PSSVFO), it is necessary to apply for an SVF license from the HKMA instead of a TCSP license.

Notes：The legal nature of stablecoins (such as whether they are securities or stored value instruments) may affect licensing requirements. It is recommended to consult legal advisors.
The TCSP license itself does not require the purchase of insurance, but if virtual asset custody is involved, it is recommended to purchase professional liability insurance or cybersecurity insurance to deal with potential risks (such as hacker attacks or asset loss). The SFC’s requirements for VASPs (such as insurance/compensation arrangements for customer assets) can be used as a reference:
  • Recommended Insurance Coverage: Covers virtual asset theft, cyber attacks, or customer losses due to negligence.
  • Industry Practice：Many virtual asset custody service providers (such as Hippo, which holds a TCSP license) Financial Services) will purchase insurance to enhance customer trust.
Notes: If a TCSP licensee is associated with a VATP (e.g. providing custody for it), the SFC may indirectly require similar insurance arrangements.
The TCSP license allows the licensee to provide trust or company services in Hong Kong, including providing ancillary services (such as company establishment or custody) for cross-border virtual asset business. But please note:
  • Hong Kong Business Contact: If you provide services to Hong Kong customers or actively promote in Hong Kong, you must ensure that you hold a TCSP license and comply with AMLO.
  • Cross-border compliance :
    • The transfer of virtual assets must comply with the "travel rule", which means collecting and sharing the identity information of both parties to the transaction.
    • If other jurisdictions are involved (such as the United States or the European Union), local AML/CTF regulations (such as FATF recommendations) must be complied with.
  • VASP Requirements：If cross-border business involves virtual asset transactions or transfers, it is necessary to confirm whether it is necessary to apply for an additional VASP license or local equivalent license.
Case：If an overseas company (such as one registered in the British Virgin Islands) provides virtual asset custody in Hong Kong, it must hold a TCSP license and a Hong Kong business registration certificate.
The scope of permission for TCSP license holders to participate in DeFi business depends on the specific activities:
  • Possible activities :
    • Set up a legal entity or provide a registered office for a DeFi project company.
    • Trust the virtual assets of DeFi protocols (such as providing custody services for decentralized wallets).
  • Infeasible activities :
    • Directly operating DeFi protocols (such as providing liquidity pools or token swaps) falls within the scope of VASP and requires applying for a VASP license.
    • If the DeFi business involves security tokens, a securities broker license from the SFC (such as a Type 1 license) may be required.
regulatory challenges：DeFi business is difficult to regulate due to its decentralized nature, and the SFC and the Company Registry may require additional disclosures to confirm business compliance.
Suggest：Clarify whether the DeFi business involves TCSP activities, and consult legal advisors to avoid touching the VASP or securities regulatory red lines.
TCSP license holders do not need to submit regulatory audit reports regularly, but they must cooperate with the company registry's inspections (Article 9 of the AMLO):
  • Check scope: The Registrar of Companies may enter business premises, inspect records and documents, or inquire about details of business operations to confirm compliance with AMLO’s CDD and record-keeping requirements.
  • Special attention to virtual asset business: If virtual asset custody is involved, the Company Registry may focus on reviewing wallet security, transaction monitoring records and the implementation of travel rules.
  • Internal Audit: Although not mandatory, TCSP licensees are advised to conduct regular internal AML/CTF audits, especially for virtual asset businesses, to ensure compliance and respond to potential inspections.
as a result of: Refusing to cooperate with an inspection constitutes a crime, punishable by fine and imprisonment (the exact amount depends on the violation).
The Registrar of Companies may inspect the business premises of TCSP licensees at any time (Article 9 of the AMLO), particularly with regard to the compliance of virtual asset OTC businesses. Countermeasures include:
  • Well-prepared records :
    • Keep complete CDD and transaction records (at least 5 years).
    • Ensure that relevant information on the Travel Rule is readily available.
  • Internal compliance process :
    • Regularly update AML/CTF policies to reflect the latest risks of virtual assets.
    • Conduct mock regulatory inspections to ensure employees are familiar with the response process.
  • Technical support :
    • Use blockchain analysis tools to generate compliance reports that demonstrate the effectiveness of transaction monitoring.
    • Ensure wallet and system security to prevent vulnerabilities from being exposed during inspection.
  • Cooperate with regulators :
    • Proactively respond to enquiries from the Companies Registry and provide required documents or explanations.
    • If involved in VASP-related activities, ensure smooth communication with the SFC.
as a result of: Refusing to cooperate with an inspection constitutes a crime, punishable by fine and imprisonment; violations found during the inspection may result in the suspension or revocation of the license.
In OTC business, TCSP licensees need to take the following measures to ensure the security of VA accounts (used for legal currency settlement) and trust assets (virtual assets):
  • Separation of funds: Separate customer funds from corporate funds in the VA account and set up an independent trust sub-account to comply with AMLO's asset protection requirements.
  • Virtual Asset Security :
    • Use multi-signature wallets and cold storage to prevent hacker attacks.
    • Audit wallet balances regularly to ensure they are consistent with customer assets.
  • Bank cooperation: Choose a bank that supports virtual asset business and sign a clear trust agreement to ensure that VA account funds are only used for customer transactions.
  • Insurance: Purchase cybersecurity insurance or professional liability insurance to cover potential financial loss or theft risks.
Regulatory concerns: The Registrar of Companies may check the operating records of the trust account to ensure that client funds have not been misappropriated.
Suggest: Cooperate with professional blockchain security companies and entrust accountants to audit trust accounts regularly.
Hong Kong banks are cautious about opening VA accounts for virtual asset businesses. TCSP licensees can adopt the following strategies to increase their success rate:
  • Providing proof of compliance :
    • Submit a copy of the TCSP license, AML/CTF policy, and registration record with the Companies Registry.
    • The proven trust model separates customer funds from corporate funds, reducing the risk of money laundering.
  • Choose the right bank :
    • Prioritize virtual banks (such as ZA Bank, Mox) or international banks (such as DBS’s crypto-friendly branch) that are more open to virtual asset business.
    • Avoid the high entry requirements of traditional banks (such as requiring high deposits or long-term business relationships).
  • Business transparency :
    • Provide a detailed business plan that describes the trust model, transaction process, and customer segments (e.g., institutional clients only) for the OTC business.
    • Demonstrate the use of blockchain analysis tools and prove transaction monitoring capabilities.
  • Intermediary assistance: Hire a professional compliance consultant or bank relationship consultant to assist in negotiations with banks and prepare application materials.
market trends: Since 2022, some banks have tightened their account opening policies due to virtual asset fraud (such as the JPEX case), and TCSP licensees need to demonstrate compliance more actively.
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