Top company secretaries say it is hard for firms to open ban

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98 per cent of top company secretaries say it is hard for firms to open bank accounts in Hong Kong
Survey also reveals that 17 per cent of companies rebuffed in the city during vetting process could open an account at the same bank in another jurisdiction.

Ninety-eight per cent of company secretaries questioned in a survey say it is difficult for firms to open bank accounts in Hong Kong, where tight vetting procedures have increasingly been adopted.
The poll showed the problem was not isolated to a few banks, as 79 per cent rated the problem “serious” and eight banks were identified.
They were HSBC, Standard Chartered Bank, Hang Seng Bank, Bank of China, DBS, Bank of East Asia, Citibank, and ICBC.

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The findings contradicted a belief by the Hong Kong Monetary Authority, the city’s banking regulator, that only two global banks – understood to be HSBC and Standard Chartered – had a serious problem in rejecting applications to open company accounts.
The survey was conducted by the Hong Kong Institute of Chartered Secretaries from July 28 to August 19. The 434 respondents mostly work for trust companies and professional firms.
The HKMA has just issued a circular to remind local lenders not to overdo their vetting of clients’ applications, warning of surprise checks to ensure they follow banking guidelines. Banks argue that they are enforcing stricter international anti-fraud regulations to protect the city’s status as a global business centre.
Among the 98 per cent who said there was a problem, 82 per cent had direct knowledge of the issue.
The institute said it generally took firms around one to three months to open a bank account.
“Such delays will potentially affect Hong Kong’s ease of doing business,” it said.

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Also, 49 per cent believed that banks were using the need for anti-money laundering and counter-terrorism financing controls as an excuse to reject low-yielding customers.
A telling observation was that 17 per cent stated there were companies that were not able to open a bank account in Hong Kong but could do so with the same bank in another jurisdiction.
The survey bore out that the belief that overseas customers, start-ups and small and medium-sized enterprises were particularly affected.
“The problem does appear to be serious enough to warrant government and regulatory action,” the institute said.
Ivan Tam, the institute’s president, said the poll was aimed at providing a reference for local lenders and relevant stakeholders to resolve the problem.
“It is of the utmost importance that Hong Kong does not lose out on its competitiveness or the ease of doing business to other jurisdictions and all stakeholders must work together to jealously preserve these strongholds of Hong Kong,” he said.
HSBC still opens hundreds of new accounts for local and international businesses in Hong Kong each monthGARETH HEWETT, HSBC
Gareth Hewett, an HSBC spokesman, said the bank was committed to serving the business community.
“We recognise the business account opening process is more rigorous than it once was, but HSBC still opens hundreds of new accounts for local and international businesses in Hong Kong each month,” he said. “In the case of offshore account opening by third parties, if there is no identifiable economic interest in HK, there can be difficulties.”
A Standard Chartered spokesman said the lender would continue to ensure a balanced, risk-based approach in customer due diligence requirements in relation to the SME sector.

This article appeared in the South China Morning Post print edition as:
poll shows extent of vetting by banks