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HKMA Encourages Banks to Adopt “Risk-Based Approach” in Account Opening for Virtual Assets Related Entities

Cointime Official

As the Hong Kong economy picks up pace post-pandemic, many newly established or overseas companies are looking to open bank accounts in Hong Kong to explore business opportunities, prompting banks to expedite handling of account opening applications. However, some companies have cited difficulties in opening accounts due to anti-money laundering (AML) reasons and perceived high risks. To address this, the Hong Kong Monetary Authority (HKMA) has reminded banks to adopt a "risk-based approach" in conducting customer due diligence (CDD) and avoid a "one-size-fits-all" approach to reject account opening applications.

The HKMA has also issued a circular clarifying possible misinterpretations by banks in respect of CDD and shared some past cases and good practices. The regulator will also jointly organise a roundtable with the Securities and Futures Commission for the banking industry and regulated virtual asset service providers (VASPs) to exchange views on account opening. The HKMA expects regulated VASPs to be able to successfully apply for a bank account through a reasonable process, as the regulatory regime for virtual asset activities in Hong Kong is implemented and supervisory regimes are strengthened.

https://www.hkma.gov.hk/eng/news-and-media/insight/2023/04/20230427/

Besides emerging sectors, the Hong Kong government has been actively exploring new markets, such as the Middle East and Southeast Asia, which have promising potential. To attract businesses from these markets, it is crucial to have high-quality financial services, and enhancing corporates' access to bank accounts would be one of the key priorities. The HKMA expects banks to allocate additional resources as needed to set up dedicated teams or hotlines to assist companies in the account opening process and capture new business opportunities.

As a regulator, the HKMA will continue to actively participate in the formulation and implementation of international standards and provide guidance to banks to help them carry out AML measures in a balanced and proportionate manner. The regulator will also work closely with the industry, gather feedback from the wide community, and exchange views with stakeholders to enhance customer experience.

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