Concept
neobank (Money Service Operator) is a license issued by Hong Kong's Customs and Excise Department (C&ED) to companies providing money remittance and currency exchange services without bank status. It is a working alternative to a banking license for fintech companies, OTC exchanges, payment processors, and cross-border remittance services. neobank permits operations with fiat and virtual assets subject to AML/CFT compliance.
Regulated by AMLO — Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap. 615 of the Laws of Hong Kong (the "(Financial Institutions)" qualifier was dropped from the ordinance's title on 1 March 2018). The license is issued for 2 years with mandatory renewal.
The neobank license is issued with two restrictions: the company may not accept deposits like a bank and cannot issue its own financial products. Within these boundaries lies flexible infrastructure: you can hold client funds in segregated accounts, issue cards through a partner issuer, conduct SWIFT operations, and exchange cryptocurrency.
🍓 Processing time — 6–10 months from application submission to C&ED. The law does not require share capital, but the regulator will verify "sufficient resources" for operational activities.
When neobank Is Needed
- Cross-border money remittance as a business model (not for own operations)
- Cryptocurrency exchange or OTC-desk with a public interface
- Payment processing for e-commerce, marketplaces, SaaS
- Multi-currency wallet for retail or B2B clients
If activities are limited to intra-group settlements or own operations — neobank is not required. A standard HK Ltd with a bank account is sufficient.
🍓 Operating without neobank where it is required is a criminal offense. Under AMLO: up to HK$1,000,000 fine + 2 years imprisonment (indictment) or HK$100,000 + 6 months (summary).
What neobank Allows You to Do
- Open sub-accounts for clients
- Conduct international transfers (including SWIFT, SEPA, FPS)
- Perform currency conversion
- Integrate SaaS payment solutions and APIs
- Work with crypto-fiat gateways
Structural Requirements
- HK Ltd registration — standard, not offshore. C&ED effectively views the company as a Hong Kong resident.
- Physical office in Hong Kong — virtual office is not acceptable; a real premises with a registration agreement is required. C&ED conducts on-site inspection.
- AML Officer with relevant experience — becomes a director of the neobank company. Must pass the neobank exam.
- AML/KYC/CTF policies and procedures — detailed Policy Manual tailored to business specifics. C&ED evaluates according to MSSB content guidelines.
- Client compliance system — KYC onboarding, transaction monitoring, sanctions screening.
- Fit-and-proper assessment — for all directors, partners, ultimate beneficial owners, and key personnel. C&ED evaluates: integrity, financial soundness, criminal history, regulatory record (Article 30 AMLO).
Taxation
All neobanks are on the general tax system and, due to having a real office, most often pay taxes as Hong Kong residents.
| Type of Income | Rate |
|---|---|
| Profit outside Hong Kong | 0% |
| Profit in Hong Kong (up to HKD 2 million) | 8.25% |
| Profit over HKD 2 million | 16.5% |
| Dividend tax | 0% |
| VAT | 0% |
Reporting and Audit
In addition to standard audit and accounting reporting, compliance reporting is maintained for the regulator (C&ED):
- Annual Report
- Suspicious Transactions Report (STR) — on suspicious transactions
- Transaction Monitoring Report (TMR) — on monitoring results
🍓 Compliance reporting is prepared by the AML Officer and is included in their compensation.
Audit Rates
| Annual Turnover | Number of Transactions | Audit Cost |
|---|---|---|
| Up to $120K | Up to 100 | $2,900 |
| Up to $120K | 100–200 | $3,700 |
| Up to $500K | Up to 100 | $4,200 |
| Up to $500K | 100–200 | $4,800 |
| Up to $1M | Up to 100 | $6,500 |
| Over $1M | Over 200 | By agreement |
📌 Bookkeeping ≈ $1,250 per month (upon request).
Stages and Timeline
Full cycle from start to license receipt — 6–10 months. We can handle each stage separately or assemble a complete package.
| # | Stage | Content | Timeline | Cost |
|---|---|---|---|---|
| 1 | Corporate structure | HK Ltd incorporation · Office lease · AML Officer appointment (director) · Corporate secretary appointment | 1 month | €50,000 |
| 2 | License preparation | Development and implementation of AML/CTF policies · KYC/compliance system integration · neobank exam completion (AML Officer) · Full documentation package assembly for submission | 1–2 months | €75,000 |
| 3 | C&ED application submission | Application submission · Regulator communication, responding to queries · Document supplementation | 6–10 months | €25,000 |
| 4 | Bank account opening | Applications to two financial institutions · Compliance process support · Virtual sub-account integration | 1–2 months | €50,000 |
| 5 | Payment infrastructure integration (optional) | SaaS/API interface integration · Crypto-fiat gateway integration · SWIFT/SEPA/FPS provider integration | 1–3 months | ≈ €50,000 |
💰 Total: €250,000 for 4 basic stages — includes all expenses and company support for 12 months.
Documents Required from Client to Start
- Shareholder's passport
- Shareholder's utility bill or bank statement
- Shareholder's CV
Maintenance
The license is valid for 2 years, renewal is mandatory. Ongoing expenses:
| Item | Cost |
|---|---|
| neobank license renewal | €20,000 every 2 years |
| Real office in Hong Kong | €20,000/year |
| Director (AML Officer) | €30,000/year |
| Audit | €3,000–10,000/year |
| Bookkeeper | €15,000/year |
| Payment interfaces (external providers) | €5,000–10,000/month |
🍓 If AML Officer + office are included in our full package — license renewal and compliance reporting are maintained continuously, with no separate charges.
What neobank Does Not Permit
- Deposit-taking activities — accepting money with an obligation to return it with interest. This requires a banking license (HKMA).
- Issuance of own financial products — bonds, shares, derivatives. Requires SFC.
- Asset management for third-party clients on a discretionary basis. Requires SFC Type 9.
- Securities brokerage — requires SFC Type 1, 2, 3 depending on the instrument.
- Stored Value Facility — issuing own cards/wallets, direct storage of client funds as electronic money. Requires neobank.
If the business requires a combination of neobank with another license — we prepare parallel applications.
Q/A
Registration and Licensing
How long does it take to obtain neobank in Hong Kong?
Full cycle — 6–10 months from corporate structure setup to license receipt. The C&ED submission stage — typically 3–5 months on the regulator's side, the rest is document preparation on our side and the client's side.
What is the minimum capital required?
The law does not require a formal minimum share capital. In practice, C&ED will request confirmation of "sufficient resources" for operational activities — this is documented through the company's financing structure and confirmation of funds in accounts.
Is a physical office required?
Yes. Virtual office is not acceptable — a real premises with a registration agreement is required. C&ED conducts on-site inspection at the office during the application review stage. Our package includes a real office in Hong Kong.
What is the fit-and-proper test?
A verification procedure for all directors, partners, ultimate beneficial owners, and key personnel under Article 30 AMLO. Evaluated: integrity, financial soundness, absence of criminal history, absence of negative regulatory history. Based on C&ED guidelines.
Activities
Can I obtain neobank for a cryptocurrency exchange?
Yes — for money changing and crypto-fiat settlement, such as OTC desks; this is one of the most common uses of the license. A centralized virtual asset exchange with a public order book falls outside neobank and requires a separate VASP license from the SFC, a regime in force since 1 June 2023.
Can neobank be used for cross-border transfers to and from Russia?
Legally — yes, neobank permits international transfers. Sanctions compliance is verified separately: each transfer goes through sanctions screening, and transactions with sanctioned persons are impossible. Hong Kong has not joined US/EU sanctions, but correspondent banks may apply their own restrictions.
What can't you do with neobank?
Accept deposits with interest (HKMA banking license), issue own financial products or electronic money (SFC / neobank), broker securities (SFC Types 1/2/3), manage third-party assets on a discretionary basis (SFC Type 9).
Maintenance
For what term is the license issued?
2 years. Renewal is mandatory before expiration. Our renewal cost is €20,000.
What reporting does neobank maintain?
In addition to standard audit reporting — three compliance reports for C&ED: Annual Report, Suspicious Transactions Report (STR) on suspicious transactions, and Transaction Monitoring Report (TMR) on monitoring results. This reporting is maintained by the AML Officer.
What are the consequences of operating without a license?
Under AMLO — criminal liability: up to HK$1,000,000 fine and 2 years imprisonment on indictment, or HK$100,000 and 6 months on summary conviction.
Sources
Related pages
📎 Need the full picture? Request our HK licence map (neobank, neobank, SFC) via the form below — we email it the same day.