Customers of some of the city’s biggest lenders risk having their accounts suspended if they fail to fully disclose all the relevant information, under tighter money-laundering laws being introduced by the end of March next year.
The levels of current scrutiny, however, still vary widely across the sector, with HSBC so far the toughest and most aggressive to introduce standard conditions for all, while others such as Bank of China (Hong Kong) continue to adopt a case-by-case approach.
Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, confirmed on Monday that all banks would need to fall in line with international requirements in terms of collecting full client information under Hong Kong’s new Anti-Money Laundering and Counter-Terrorist Financing (Financial Institution) Ordinance.
The law was introduced in January 2015, with a three-year deadline set for March 2018, for all banks to comply with customer due diligence and record-keeping measures that match the recommendations of the international anti-money laundering body, the Financial Action Task Force.
Under the law, all banks need to regularly review “customer information to ensure it is up-to-date and relevant”, according to an HKMA spokeswoman.
“The frequency and extent of the reviews will be determined by individual banks based on various factors, including the risk profile of the customer concerned,” she said.
The city’s largest bank, HSBC is seen to impose the toughest customer conditions, following its US$1.9 billion penalty in 2012 for breaching American money-laundering rules.
HSBC chief executive Diana Cesar said last week it will be contacting all retail and corporate clients this year to update their contact information, sources of funding, and the purposes of their accounts, and for the latter details of corporate structure and country of operations.
Those failing to supply the information, she said, before that deadline could have their accounts suspended.
Hang Seng Bank, an HSBC subsidiary, is already making equally tough measure compulsory as is its parent, although it does not plan to contact all customers, focusing only on those clients with incomplete or outdated information. It also plans to suspend any account if a client fails to give it the relevant information.
“The purpose of gathering customer information is to help the bank protect them against financial crime,” a Hang Seng Bank spokeswoman said.
“We will endeavour to contact our customers if the required information is still unavailable, and our services to those accounts may be affected.”
Bank of East Asia still does not require all existing clients to offer full information, but it will be reviewing its measures.
“If our relationship with a customer changes – such as a corporate client changing its structure, stated activity, or its nature of transactions – BEA will obtain additional relevant information to ensure the basis of our relationship is fully understood,” a spokesman there said,
Again, if clients fail to give the required information, BEA may also suspend their account, she added.
Both Standard Chartered and Bank of China (Hong Kong) said they could still not give definitive details, only that they update client information on a regular basis.
The two lenders also declined to confirm if they would suspend clients’ accounts if refused any information demanded.
“We handle situations on a case-by-case basis,” a spokeswoman for Bank of China (Hong Kong) said.