Hong Kong's anti-money laundering regime is undergoing its most significant tightening in nearly a decade. Revised requirements under the territory's AML and counter-terrorist financing legislation took effect in phases from late 2023, with the final wave of obligations now binding on a broad range of regulated and non-regulated businesses. International companies with Hong Kong operations face a narrow window to align their internal controls, or risk enforcement action, account restrictions, and reputational harm.
Hong Kong's updated AML rules impose reinforced know-your-customer (KYC) and beneficial owner disclosure obligations on financial institutions, trust and company service providers, and designated non-financial businesses operating in the territory. Companies must complete or refresh customer due diligence records and register beneficial ownership information with the Companies Registry Hong Kong (Hong Kong's central corporate registry) by the deadlines set under the revised legislation. Failure to comply exposes directors and the company itself to civil penalties and potential criminal liability.
This alert summarises what changed, which business categories are affected, and the immediate steps international companies must take now.
What changed and when it takes effect
Hong Kong's primary AML legislation was amended to strengthen two core areas. First, the threshold criteria for enhanced due diligence were lowered. Transactions and relationships that previously fell below the trigger point now require full customer due diligence – including verification of the beneficial owner – at earlier stages of the business relationship.
Second, the beneficial ownership registration regime was made mandatory for a wider category of companies. All locally incorporated companies and registered non-Hong Kong companies must now maintain an accurate register of significant controllers and make that register accessible for inspection on short notice. The Companies Registry Hong Kong began accepting and auditing these registers as part of routine compliance checks from the start of 2025. Regulators, including the Securities and Futures Commission (SFC), have simultaneously published updated guidance on how financial intermediaries must document, verify, and periodically review customer identity.
Correspondent banking relationships are directly in scope. Institutions providing correspondent banking services to overseas banks must now apply risk-based due diligence at onboarding and on a rolling basis. This requirement extends to institutions facilitating credit facility drawdowns where the ultimate obligor is an offshore entity.
For a comparative view of how similar AML reforms are unfolding in other high-growth markets, see our alert on AML updates in the UAE.
Who is affected and the compliance threshold criteria
The revised obligations apply across four main business categories operating in Hong Kong.
- Licensed banks and deposit-taking companies – full KYC refresh required for all existing high-risk customers and any customer relationship flagged under the updated risk-scoring criteria.
- Securities dealers, asset managers, and SFC-licensed intermediaries – enhanced due diligence now applies at account opening and on any material change in customer circumstances, including changes in beneficial ownership structure.
- Trust and company service providers – required to verify beneficial owner identity for all clients and to update their own internal AML programmes to reflect the new threshold criteria.
- Designated non-financial businesses – including lawyers, accountants, and real estate agents – must apply customer due diligence rules equivalent to those binding on financial institutions for transactions above the prescribed monetary threshold.
The threshold for mandatory beneficial owner verification is a controlling interest of 25% or more in the shares or voting rights of a Hong Kong company. Where ownership is layered through intermediate vehicles, the obligation passes through to the ultimate natural person. Businesses that cannot identify a natural person at or above the threshold must escalate to senior management review and document the steps taken.
Bank account opening for new corporate customers now requires submission of a completed beneficial ownership declaration before any account becomes operational. The Hong Kong High Court has confirmed in recent proceedings that regulatory non-compliance at the account opening stage can constitute a basis for account freezing orders sought by the authorities.
To receive an expert assessment of your AML compliance position in Hong Kong, contact us at info@ferrazwhitmore.com.
Immediate action items for international companies
International businesses with Hong Kong entities or regulated activities should treat the following steps as urgent priorities.
- Audit your beneficial owner register. Confirm that the register held at the Companies Registry Hong Kong is accurate, up to date, and reflects any structural changes made since incorporation. Errors or omissions now carry direct penalty exposure for directors.
- Refresh KYC files for existing relationships. For banks and SFC-regulated entities, conduct a risk-based review of all customer files. Prioritise accounts where ownership has changed, where the customer operates in a high-risk jurisdiction, or where the last KYC review is more than 24 months old.
- Review correspondent banking and credit facility arrangements. If your Hong Kong entity provides or receives correspondent banking services, or has drawn on a credit facility where the lender is subject to Hong Kong AML rules, confirm that all required due diligence documentation is in place and current.
- Update your internal AML programme. Policies drafted before the 2023 amendments are likely non-compliant. Update the programme to reflect the new threshold criteria, enhanced due diligence triggers, and the SFC's revised guidance on documentation standards.
- Train relevant staff. The revised rules impose personal obligations on compliance officers and senior management. Ensure that all staff involved in customer onboarding, account management, or transaction monitoring have completed updated training before the next regulatory examination cycle.
Disputes arising from AML enforcement or account freezing orders in Hong Kong may be referred to the Hong Kong International Arbitration Centre (HKIAC) under appropriate contractual arrangements, or litigated before the Hong Kong High Court. Acting before an enforcement trigger arises is materially less costly than managing a post-action response. Companies that delay compliance reviews until a regulatory examination is announced frequently find that remediation options are significantly narrowed.
For a broader view of banking and finance obligations applicable to your Hong Kong operations, visit our banking and finance services page for Hong Kong. Companies active in capital markets should also review the updated obligations covered on our capital markets page for Hong Kong.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. As a law firm with deep experience in Hong Kong and Asia-Pacific markets. Our team combines Portuguese civil law expertise with English common law tradition to deliver practical AML compliance and banking and finance advisory for international companies operating in the territory. We work with financial institutions, corporate groups, and in-house legal teams who need a lawyer in Hong Kong-facing matters who understands both the regulatory detail and the cross-border implications. Our banking and finance practice covers AML programme design, beneficial owner structuring, SFC regulatory compliance, and enforcement response. The firm's Lisbon base provides direct access to EU regulatory systems, while our common law expertise supports enforcement and advisory strategies in English-speaking jurisdictions including Hong Kong. To discuss your AML compliance obligations in Hong Kong, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.