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Banking & finance
OpinionComment

Why is it so difficult for small businesses to open an account at some banks in Hong Kong?

Arthur Yuen says banks’ due diligence checks on customers need to be stringent but not prohibitive, so that SMEs – particularly start-ups and foreign companies – can access the services they need

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Arthur Yuen says banks’ due diligence checks on customers need to be stringent but not prohibitive, so that SMEs – particularly start-ups and foreign companies – can access the services they need
Arthur Yuen
For the banks with very high rejection rates, they are also usually the first port of call for both local and overseas companies when they seek to open an account in Hong Kong. Illustration: Craig Stephens
For the banks with very high rejection rates, they are also usually the first port of call for both local and overseas companies when they seek to open an account in Hong Kong. Illustration: Craig Stephens
When I attend functions and meetings these days, as a banking regulator I tend to get an earful of comments from business contacts about their experiences, very often difficult ones, in opening bank accounts in Hong Kong. The frustrations appear to be more pronounced among start-ups and foreign companies, worse if you happen to tick both boxes.

I am naturally very concerned, given that bank accounts are essential for operating businesses and financial inclusion. I am surprised that this should happen in Hong Kong, which has a well-developed and highly efficient banking system.

Don’t count on Hong Kong when it comes to one simple thing: opening a business bank account

Let me start with the context. One may recall that, 10 years ago, it was possible to open a bank account rather swiftly.

It’s sobering now to reflect how challenging the process can be for some parts of the community. In recent years, international efforts in anti-money laundering and counterterrorist financing have been stepped up significantly.

At the same time, global sanction regimes and other regulatory requirements have added to the complexity of the landscape in which banks now operate. As a result, banks are subject to much tighter international standards in establishing and maintaining relationships with potential and existing customers.

The HKMA requires banks in Hong Kong to adopt a risk-based approach, which means customer due diligence measures should be applied in a balanced manner, proportionate to the different risks which customers, transactions or services will each present. Photo: Sam Tsang
The HKMA requires banks in Hong Kong to adopt a risk-based approach, which means customer due diligence measures should be applied in a balanced manner, proportionate to the different risks which customers, transactions or services will each present. Photo: Sam Tsang
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