The introduction of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Ordinance 2018 (AMLO) has reinforced the importance of the Designated Representative in corporate governance. This role plays a crucial part in maintaining transparency and accountability within companies.

Role of a Designated Representative under AMLO

The AMLO Regulation, aimed at combating money laundering and terrorist financing, mandates that companies appoint a Designated Representative who assists law enforcement agencies in accessing beneficial ownership information. This individual acts as a liaison between the company and authorities, ensuring compliance with transparency obligations.

A key responsibility of the Designated Representative is to provide access to the Significant Controllers Register (SCR) upon request by law enforcement.

What is the Significant Controllers Register (SCR)?

The SCR records details about a company’s Ultimate Beneficial Owners (UBOs) and individuals with significant control over the entity. A significant controller is defined as:

• Holding more than 25% of issued shares
• Controlling more than 25% of voting rights
• Having the authority to appoint or remove a majority of directors
• Exercising significant influence or control over the company

Reporting and Compliance Responsibilities

Companies must maintain an up-to-date SCR, ensuring that the Designated Representative oversees its accuracy and accessibility for law enforcement purposes.

Failure to comply with these obligations is a criminal offence, carrying a fine of HK$25,000 and a daily penalty of HK$700.

Mandatory Information for the SCR

For an individual, the SCR must include:

• Full name
• Correspondence address
• Identity card or passport number (including issuing country)
• Date of becoming a registrable person
• Details of their control over the company

For a legal entity, the SCR must contain:

• Full name
• Registration number (or equivalent in jurisdiction of incorporation)
• Registered or principal office address
• Legal structure and governing law
• Date of becoming a registrable legal entity
• Nature of control over the company

Who Can Be Appointed as a Designated Representative?

A Designated Representative must be:

• A member, director, or employee of the company who is a natural person resident in Hong Kong; or
• A TCSP licensee, legal professional, or accounting professional as defined under AMLO.

Conclusion

The role of the Designated Representative is fundamental to Hong Kong’s corporate transparency framework under AMLO. Ensuring compliance is not only a regulatory requirement but also a crucial aspect of corporate governance. Non-compliance can result in severe penalties.

If you require assistance in appointing a Designated Representative, contact us today to find a tailored solution for your needs.