Hong Kong Monetary Authority: Intervention on Bank Account Opening Policies

In the last couple of years, some of Hong Kong's leading banks have significantly tightened their customer due diligence requirements in relation to the opening and maintenance of bank accounts in the city. This has made it very difficult for foreign small and medium sized enterprises to have access to bank accounts in Hong Kong.

In September 2016, the Hong Kong Monetary Authority intervened to warn local banks against applying due diligence requirements that are disproportionate to the likely risk level of the customers and noted that overly stringent policies have resulted in many unsuccessful account opening applications and/or unpleasant customer experiences.

Whilst recognising that it is important to ensure that anti-money laundering and counter-terrorism controls are sufficiently robust and comply with all the relevant regulatory requirements, the Hong Kong Monetary Authority expects banks to adopt a risk-based approach and refrain from adopting practices that would result in financial exclusion, particularly in respect of the need for bona fide businesses to have access to basic banking services.

The Hong Kong Monetary Authority has also compiled a list of banks willing to offer services to foreign small and medium-sized enterprises and start-ups which should make it easier for foreign ­investors to open accounts in the city. This list is available from HK Invest.

This is a welcome intervention by the Hong Kong Monetary Authority which should lead to a more level playing field and help foster a more business friendly environment in Hong Kong.

Jurisdictions: 

Nathan Powell is a partner in Ogier’s Hong Kong office. He has broad corporate finance practice with particular expertise in using BVI, Cayman and Jersey companies for debt capital markets, IPOs, and private equity. He is an Advocate of Jersey’s Royal Court, and admitted as a solicitor in the BVI.