Independent Audit for Money Lender
The licensing of money lenders and regulation of money-lending transactions are governed by the Money Lenders Ordinance (MLO), Chapter 163 of the Laws of Hong Kong.
A money lender's licence is valid for 12 months. Application for renewal of a licence should be made within 3 months prior to the expiration of the licence.
In general, licensees are required to take all reasonable measures to mitigate the risk of ML/TF by assessing the ML/TF risk of their AML/CTF systems on, among other areas, the independent audit function.
Major Requirements on Independent Audit Function for Money Lender
According to Guideline on Compliance of Anti-Money Laundering and Counter-Terrorist Financing Requirements for Licensed Money Lenders,
I) A licensee should establish an independent audit function which should have a direct line of communication to the senior management of the licensee. The function should have sufficient expertise and resources to enable it to carry out its responsibilities, including independent reviews of the licensee’s AML/CFT Systems. (3.11)
II) The audit function should regularly review the AML/CFT Systems to ensure effectiveness. The review should include, but not be limited to:
a) adequacy of the licensee’s AML/CFT Systems, ML/TF risk assessment framework and application of risk-based approach (RBA);
b) effectiveness of suspicious transaction reporting systems;
c) effectiveness of the compliance function; and
d) level of awareness of staff having AML/CFT responsibilities. (3.12)
III) The frequency and extent of the review should be commensurate with the nature, size and complexity of its businesses and the ML/TF risks arising from those businesses. Where appropriate, the licensee should also seek a review from external parties. (3.13)
From Question 4.7 of the Supplementary Information Sheet - Application by a company for renewal of a money lenders licence (Form SIS-3):
Has the company established an independent audit function which regularly reviews the: (a) adequacy of the company’s AML/CFT Systems, ML/TF risk assessment framework and application of risk-based approach; (b) effectiveness of suspicious transaction reporting systems; (c) effectiveness of the compliance function; and (d) level of awareness of staff having AML/CFT responsibilities?
If yes, who performs the independent audit function and how often is the independent review conducted?
What ComplianceOne can do for you
✓ Development of comprehensive AML/CFT policies, procedures, and internal control documents
✓ Provision of AML-related compliance advisory services
✓ Delivery of online or face-to-face compliance training
✓ Preparation of independent AML/CFT audit reports
✓ Inclusion of complimentary name screening credits
✓ Report signing by a practicing CPA (value-added service)
The Independent Audit will be conducted remotely or through face-to-face meetings. The scope of work includes reviewing screening records, staff training logs, the company's audit function operations, suspicious transaction reports and case analyses, as well as sample checks of client files and transaction records. Throughout the process, we will maintain communication with the client and ultimately prepare the audit report. The entire process takes approximately 3 to 4 weeks.
Timeline
External Reference
1.Company Registry - Application for a Money Lender's Licence and its Renewal:
https://www.cr.gov.hk/en/services/money-lenders/application/licence-renewal.htm
2.Guideline on Compliance of Anti-Money Laundering and Counter-Terrorist Financing Requirements for Licensed Money Lenders:
https://www.cr.gov.hk/en/publications/docs/AntiMoneyGuide_e_(March_2025).pdf