Hong Kong Money Lenders Licence: Requirements Under the Money Lenders Ordinance Cap. 163

Hong Kong Money Lenders Licence Under Cap. 163 Requirements

Carrying on business as a money lender in Hong Kong requires a licence under the Money Lenders Ordinance (Cap. 163). This licence is distinct from a Money Service Operator licence for remittance or money changing, and from a banking licence issued by the Hong Kong Monetary Authority. The Commissioner of Customs and Excise administers the licensing regime. The application process involves a fit and proper test, criminal record checks and ongoing compliance obligations.

Money Lenders Ordinance Hong Kong Cap 163

The Money Lenders Ordinance (Cap. 163) is the primary legislation governing money lending in Hong Kong. Section 2 defines a money lender as any person who carries on business as a money lender, whether or not that person also carries on other business. Carrying on business without a licence is an offence under section 7.

The Ordinance sets the maximum interest rate a licensed money lender may charge at 60 per cent per annum under section 24. A rebuttable presumption of extortionate credit bargain applies if the rate exceeds 48 per cent per annum. The Commissioner of Customs and Excise is the licensing authority under Cap. 163. The Ordinance grants the Commissioner powers to investigate applicants, impose conditions on licences, and revoke licences where the holder ceases to be fit and proper.

Hong Kong Money Lending Licence Application

Apply to the Commissioner of Customs and Excise using the prescribed form. The applicant must be a natural person or a corporation. For a corporate applicant, provide the Certificate of Incorporation, Business Registration Certificate, and details of directors, shareholders, and beneficial owners. Include a business plan describing the proposed lending activities, the source of funds the company intends to lend, and the target customer base.

The Commissioner may request additional information. Evidence of financial standing and the premises from which the business will operate are common requests. No statutory time limit governs processing. The Commissioner takes several months to complete the assessment.

Money Lender Licence Hong Kong Requirements

The applicant must be a fit and proper person. That means no criminal record for dishonesty, fraud, or money laundering. No history of bankruptcy or insolvency. The Commissioner conducts a criminal record check through the Hong Kong Police.

The business premises must be suitable for money lending operations, with adequate security and record-keeping facilities. A physical office in Hong Kong is mandatory. A virtual office or residential address is not acceptable. The applicant must show that the source of funds for lending is legitimate and not derived from criminal activity. The Commissioner may require audited financial statements or bank references.

Cap 163 Hong Kong

Cap. 163 Hong Kong refers to the Money Lenders Ordinance, Chapter 163 of the Laws of Hong Kong. The Ordinance has been amended several times, most recently to strengthen anti-money laundering provisions.

Section 23 requires every licensed money lender to display the licence at the business premises. Section 26 requires the money lender to give the borrower a written statement of the loan terms before the loan is made. Section 30 imposes a duty to keep proper books of account and records of all loans for at least seven years after the loan is fully repaid. The Commissioner of Customs and Excise may inspect those records at any time. Failure to comply with Cap. 163 is a criminal offence punishable by a fine and imprisonment.

Fit and Proper Test and Ongoing Compliance

The fit and proper test is the central assessment. The Commissioner considers the character, financial integrity, and business experience of the applicant and its key personnel. For a corporate applicant, the test extends to every director, every shareholder holding 10 per cent or more of the shares, and any beneficial owner who controls the company.

The Commissioner checks whether any of these individuals has been convicted of an offence under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), the Companies Ordinance (Cap. 622), or the Money Lenders Ordinance itself. A conviction for money laundering, fraud, or theft will disqualify the applicant. The Commissioner may also consider whether the applicant has been refused a licence in another jurisdiction.

Once licensed, ongoing obligations apply. Renew the licence annually. Submit annual returns to the Commissioner. Maintain customer due diligence records. Verify the identity of each borrower, record the purpose of the loan, and retain copies of identification documents. Report suspicious transactions to the Joint Financial Intelligence Unit. The Commissioner may conduct periodic inspections of the premises and records. Failure to maintain compliance can result in the licence being revoked or not renewed.

Distinction From Other Licences

A Hong Kong money lenders licence under Cap. 163 is not the same as a Money Service Operator licence, which is required for money changing or remittance services. A money lender lends its own funds. A money service operator transmits funds on behalf of customers.

A money lender is also not a bank. Banks are licensed by the Hong Kong Monetary Authority under the Banking Ordinance (Cap. 155) and can take deposits from the public. A money lender cannot. A money lender cannot accept deposits or issue credit cards. A company that holds a money lender licence may also need a licence from the Securities and Futures Commission if it carries on a regulated activity, such as dealing in securities or advising on securities. The SFC licence regime covers Type 1 to Type 13 regulated activities. A money lender that also provides investment advice must hold the relevant SFC licence.

Record-Keeping and Customer Due Diligence

Keep records of all loans for at least seven years after the loan is repaid. The records must include the borrower's name, address, and identification number, the amount and terms of the loan, the interest rate charged, and the repayment schedule.

Conduct customer due diligence on each borrower. Verify the borrower's identity. Assess the borrower's ability to repay. Identify the beneficial owner of any corporate borrower and take reasonable steps to verify that owner's identity. These obligations are consistent with the requirements of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, which applies to money lenders as designated non-financial businesses and professions. The Commissioner of Customs and Excise may inspect the money lender's records at any time without notice.

Interest Rate Cap and Exemptions

Section 24 of the Money Lenders Ordinance imposes an interest rate cap of 60 per cent per annum on loans made by licensed money lenders. Any loan agreement charging interest above this rate is unenforceable. Section 25 creates a rebuttable presumption that a loan is extortionate if the interest rate exceeds 48 per cent per annum. The burden is on the money lender to prove that the rate is not extortionate.

Certain lenders are exempt from the licensing requirement. These include banks licensed under the Banking Ordinance, the Hong Kong Monetary Authority itself, and certain statutory bodies. A company that lends money only to its own employees or to other group companies may also be exempt. The exemption is narrow. Confirm it with legal advice. An exempt lender is not required to hold a money lender licence but must still comply with the interest rate cap and other provisions of the Ordinance.