DPMS Category B: pre-transaction compliance checklist

The answer first

Before a Category B DPMS registrant enters into a cash transaction, or a series of linked or apparently linked cash transactions, at or above the HK$120,000 specified cash transaction threshold, it must identify and verify the customer, understand who is behind the transaction, screen for sanctions and PEPs, assess the risk, and keep a full record.

This checklist summarises those steps. Each is tagged as statutory (set by the AMLO and Schedule 2), guidance (the Commissioner's AML/CFT Guideline) or firm policy (a control a business chooses to apply above the minimum). It is a working tool, not a substitute for your AML/CFT policy manual or legal advice.

At a glance

Applies to: Cash or part-cash dealings at or above HK$120,000, including linked transactions
Covers: Walk-in and pre-arranged sales, buy-backs, trade-fair sales
Record retention: At least 5 years
Not covered: Ongoing monitoring, suspicious transaction reporting, registration and renewal

A. Confirm the transaction is in scope

#	Step	Basis
1	Confirm the transaction or linked series meets the HK$120,000 statutory threshold (Schedule 3H, AMLO). Do not apply a different internal threshold.	Statutory
2	Confirm the customer is paying wholly or partly in cash; part-cash that reaches the threshold in aggregate still counts.	Statutory
3	Check for linked or apparently linked transactions with the same customer in a short period.	Statutory
4	If the customer is a non-Hong Kong dealer (for example a trade-fair exhibitor), note their own obligation to file a Cash Transaction Report (Form 8) with C&ED, and record that you drew it to their attention.	Statutory / Firm policy

B. Identify and verify the customer

#	Step	Basis
5	Identify the customer with acceptable identification (photo ID for individuals; constitutional and registration documents for companies).	Statutory
6	Verify identity against reliable, independent sources before completing the transaction.	Statutory
7	For a legal person, verify legal form, structure, registered office and directors or senior managers.	Statutory
8	If someone presents the transaction for the customer, verify that person's identity and their authority to act.	Statutory
9	For a corporate customer, obtain written authorisation naming the individual dealing on its behalf.	Statutory / Firm policy

C. Beneficial ownership and structure

#	Step	Basis
10	Identify the individuals who ultimately own or control a non-individual customer.	Statutory
11	Take reasonable measures to verify their identity.	Statutory
12	Understand the ownership and control structure well enough to know who is behind the transaction.	Statutory

D. Purpose, source of funds and screening

#	Step	Basis
13	Obtain the purpose and intended nature of the transaction.	Statutory
14	Where risk warrants, obtain the source of funds and, where relevant, source of wealth.	Statutory / Guidance
15	Screen the customer, beneficial owners and any representative against sanctions and terrorist designation lists.	Statutory
16	Screen them for PEP status.	Statutory
17	If a PEP is identified, apply enhanced due diligence and obtain senior management approval before proceeding. Some firms choose to decline PEP cash customers altogether as a matter of policy.	Statutory / Firm policy
18	Check for exposure under the United Nations Sanctions Ordinance and the Weapons of Mass Destruction (Control of Provision of Services) Ordinance.	Statutory

E. Risk assessment and enhanced measures

#	Step	Basis
19	Assess against your institutional risk assessment (customer, product, channel, geography) and assign a rating.	Guidance
20	Apply enhanced due diligence for higher-risk cases, such as a first-time walk-in cash customer or a request for unusual secrecy or urgency.	Statutory / Guidance
21	Use simplified due diligence only where the statutory conditions are met and no disqualifying factor is present.	Statutory

F. Red flags and internal sign-off

#	Step	Basis
22	Check against your red-flag list: payments structured just under HK$120,000, third-party payment, reluctance to provide ID, insistence on cash without reason, a profile that does not fit the transaction.	Guidance / Firm policy
23	Escalate any red flag to the Compliance Officer or MLRO and do not complete the transaction while the escalation is open.	Firm policy
24	Obtain and record any required sign-off: who approved and when.	Statutory / Firm policy

G. Documentation and readiness

#	Step	Basis
25	Record the identification and verification steps, documents relied on and screening outcome.	Statutory
26	Complete an internal cash transaction record, including the source and intended use of the cash. This is separate from Form 8.	Firm policy
27	Keep all due diligence and transaction records for at least 5 years from the transaction or the end of the relationship, whichever is later, retrievable promptly for C&ED.	Statutory
28	Confirm the full file is retrievable before treating the transaction as closed.	Guidance

Key takeawayDo not complete a cash transaction at or above the threshold until identification, screening and any escalation are finished and recorded. Most failures are about sequence: the paperwork done after the cash has changed hands.

Please confirmConfirm the current Form 8 content and filing channel directly with C&ED before relying on it in a specific case.

How DBMS Global can help

An editable version of this checklist, with sample cash transaction record and authorisation letters, tailored to your business.
AML/CTF policy manuals, institutional risk assessments and red-flag lists.
Compliance Officer and MLRO set-up and staff training.
DPMS registration, change notifications, annual returns and renewal.

In summary

Confirm scope, identify and verify, understand ownership, screen, assess risk, record.
Escalate red flags before, not after, the transaction.
Keep records for at least 5 years.

Official references

Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), Part 5C and Schedules 2 and 3H
Customs and Excise Department: AML/CFT Guideline for DPMS, www.customs.gov.hk