What are the requirements for obtaining a money lender's licence? No criminal record for money lenders?

“A money lender is allowed to operate and promote his own loan business. Money lending transactions and licensing are regulated under the Money Lenders Ordinance, Cap 163. The process of obtaining a licence is more stringent as the business involves borrowing and may have a serious impact on the public interest. If you are interested in learning more about the requirements for a money lender’s licence, please read on.

What are the requirements for a money lender’s licence?
To apply for a money lender’s licence under the Money Lenders Ordinance, an application must be vetted by three government departments (including the Licensing Tribunal, the Money Lenders Registry and the Police Force). In particular, the following conditions must be met in order to apply for a money lender’s licence to carry on a money lender’s business in Hong Kong.

  1. Background check of the applicant for a money lender’s licence
    As a reference for licensing, the Bureau will consider whether the applicant for a money lender licence is a suitable person to carry on a money lending business. These include whether the person concerned has sufficient knowledge of the money lending business, whether the licence would be contrary to the public interest, etc.

In addition, in order to prevent the money lender from engaging in improper practices such as illegal money laundering and loan collection, it is generally required that the money lender has no criminal record or disciplinary action, and that he or she has a degree in accounting or has worked as an accountant and has at least five years of financial approval experience.

  1. Registered Limited Company
    Secondly, applicants for a money lender’s licence are required to register a limited company in Hong Kong and decide on the shareholders, directors, company secretary and other key positions.

As a limited company can bear the risk in the name of a legal entity, basically, applicants for a money lender’s licence will be registered as a limited company rather than an unlimited company. However, there is no explicit rule that unlimited companies are not allowed to apply.

  1. Location of the company office
    As the premises for a money lender’s licence are required to be “suitable for the operation of a money lending business”, the applicant must explain to the leaseholder (landlord or other relevant organisation) the purpose of the money lending business before the business commences.

A “Notice of No Objection” must be signed and issued by the landlord and the Business Centre to indicate the landlord’s awareness during the negotiation process. In addition, the office of the money lender must be equipped with appropriate security devices such as security cameras, wallets, etc. for safe keeping of property.

  1. Having a commercial bank account
    A final requirement is that the company must have a commercial bank account in order to carry out lending activities. As you can imagine, a full bank account is key to running a money lender business.

The process of applying for a bank account also requires a lot of paperwork, or the completion of documents to explain the business plan and how to effectively prevent illegal practices such as money laundering. Moreover, some banks in Hong Kong (Hang Seng, HSBC, etc.) do not accept applications for money lender licences.

The above information is for reference only. If you have any questions about taxation or accounting, the best thing to do is to seek advice from a professional accountant and we welcome your enquiries.

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