HKMA urges banks to give better access to banking services

The Hong Kong Monetary Authority (HKMA) issued, on 27 April, a circular entitled ‘Access to Banking Services for Corporate Customers’, to encourage authorised institutions (banks) to be to be supportive of Fintech and other new businesses in opening bank accounts in Hong Kong.

In considering account opening applications for new businesses, the HKMA advises banks to adopt a proportionate and effective risk-based approach to anti-money laundering and counter-financing of terrorism (AML/CFT) regulation.

In the Circular, HKMA addresses three key areas:

• Initial customer contact – HKMA asks banks to review their account opening procedures and customer due diligence (CDD) measures to balance their management of AML/CFT risks with the provision of inclusive access to banking services. It recommends that banks should provide relevant training and up-to-date information to their staff and establish processes that adequately support applications from specialised industries by equipping dedicated teams with appropriate training and knowledge.
• Understanding Market Developments – Given the rapid developments in technology, the HKMA encourages banks to adopt a forward-looking approach and improve their understanding of new and developing sectors and related market developments, to help them differentiate individual customers with different risk characteristics. Banks are asked to support virtual asset services providers (VASPs) regulated by the Securities & Futures Commission (SFC) with their “legitimate need for bank accounts” in Hong Kong.
• Risk Management vs Wholesale De-risking – HKMA warns banks against a wholesale de-risking approach that precludes potential customers with a common background – particular industries or countries – from target customer segments. Instead, it encourages banks to gain an understanding of the risks and adapt their operational approaches consistent with a risk-based approach.

The HKMA also recommends that banks support its Tiered Account Services initiative. This encouraged banks to offer a limited set of banking services (Simple Bank Accounts) requiring less extensive customer due diligence (CDD) measures to small- and medium-sized enterprises, start-ups and some offshore companies establishing a presence in Hong Kong.

In respect of countries ‘grey listed’ by the Financial Action Task Force (FATF) as jurisdictions subject to ‘increased monitoring’, the Circular notes that the FATF does not call for entire classes of customers to be cut off from banking services, or for enhanced CDD to be applied solely on a customers’ connection with a grey list jurisdiction.

Banks, said the HKMA, should instead apply a risk-based approach, taking into account a customer’s connection with a grey list jurisdiction in building the customer risk profile, and adopt CDD measures proportionate to the particular risks.

It is essential that technology companies entering Hong Kong can access banking services to conduct business, especially as Hong Kong seeks to develop its digital economy.