Expats Guide of Business Account Opening in HK
Updated on 11 Sep 2019: Business people in Hong Kong are opening their second business account for their companies incorporated in HK and other offshore jurisdictions. It is because Singapore is praised as the safe harbor of capital in Asia and Singapore are providing remote account opening service for selected business clients. Details of Singapore remote account opening service is here.
Updated on 16 Jul 2018: We found that some HK banks are more open to HK and overseas companies with non-HK residents directors and/or shareholders, details are here.
Many clients, overseas or HK companies, have expressed their disappointment in HK bank account opening. The HK banks require our clients to provide massive amount of documents and information for account application, but they often reject the application after very long processing time. Although HK has been awarded as the world’s freest economy for 8 years, the difficulty in bank account opening has been causing not only inconvenience to business, but also turn down new business in HK.
We have been taking part in assistance services in account opening to worldwide investors for a decade. Admittedly, we witness HK banks are taking stringent KYC (Know-Your-Customer) policy on account opening processes due to stepping up international efforts in combatting illegal activities, compared with five to ten years ago. However, the banks are not closing their business here, they just more cautious about their new customers and apply more stringent customer due diligence measures.
For companies who plan to open business bank account in HK, we think that they can have an understanding about the environment of HK bank account opening and get well-prepared of their application.
Do HK banks hate newly established companies?
It is true that the start-ups do not appear as profitable business to the banks, however, start-ups are challenged by banks’ customers due diligence requirement (CDD) because start-ups often lack the track records in their business history, banks are unable to distinguish between the vast majority bona fide business and those few businesses made as a surrogate for money laundering or terrorist financing. To take the risk out banks, the bankers have to require in-depth information and supporting document for in-depth understanding of the company’s’ business model and finance.
Speaking of business models, start-ups engaging in innovative info-tech services and high-tech products are not familiar with banks yet. Nevertheless, banks are more forthcoming to begin business relationship with high-tech companies, we suggest start-ups to thoroughly prepare for banks concerned information including their business models and clientele, projected profit and loss, funding source, directorship, mode of operations, expected bank account activities, and business plans supported by agreements or communications with potential buyers or suppliers. Meanwhile, start-ups can definitely assist the application by explaining to banks their business models in layman terms in complement of trustworthy reference.
From our experience, accounts at banks in HK have been successfully opened for start-ups since they paid extra effort in gathering relevant information and material explaining their new business.
Can HKMA assist my account opening application?
Although HK Monetary Authority (HKMA) is the HK government authority maintaining stability of HK banking system and thus the regulatory body of bank, banks at HK can make the final decision of account opening for customers.
Meanwhile, HKMA suggests the public could go through the banks’ review mechanism for the bank account applicants to lodge their enquiries regarding their rejection of applications. It is an internal feedback system of banks under which the bank would re-examine the rejected applications.
HKMA cannot force the banks to open the account. In fact this review mechanism is the next step to request the bank concerned to review the lodged application at a more senior level of the bank so the applicants could have second chance to submit additional information to satisfy the bank’s customer due diligence requirements.
The review mechanisms of a list of banks in HK are shown on the HKMA webpage:
If you are unhappy to the outcome of the concerned bank’s review mechanism, you can write to HKMA at email@example.com to request appropriate follow-up on your case.
How does the bank’s customer due diligence work?
For small business owners globally including HK, the bank’s customers due diligence requirement puzzles, and sometimes frustrate them to start their business in HK. First of all, banks in HK do not disclose their account opening procedures, the customers are not allowed to know about. Secondly, banks make preliminary information of documentation and information requirements for opening accounts available to public, they tell the customers what they really need after submission of the applications to their internal processing.
Following tighter international standards in fighting against global tax evasion, money laundering and terrorists financing, banks take risk-based approach to screen out customers who are considered as high risk, meaning the customers are less likely to fulfil the bank’s compliance policy. Given that the majority of account opening applicants are small businesses and are based overseas, the banks are unable to effectively distinguish bona fide business documents from delusive information, they have to turn down many applicants who are found unclear information.
For business owners based outside HK, we have a few piece of advice in process flow before they begin their applications of business bank accounts.
The very basic information about account opening procedures and information requirements on the banks websites in HK, you must have everything accordingly and present them in a user-friendly and professional manner.
The bank hotlines are unable to review your information but they can help to arrange a “pre-vetting” process by their staff to take a look at your documents for troubleshooting.
Walk-in application are nearly impossible to succeed since the bankers need time and effort to study your information even this is prepared based on the requirement listed on their websites, you must make an account opening appointment by email or phone at least one month in advance.
Face-to-face meeting in HK is one of the basic requirement of account opening, and the meeting lasts for around 1 hour in which is a formal interview for the bankers to have deeper understanding to your business. The beneficial owner of the account and key persons of the company must attend the meeting.
For overseas applicants, you can entry HK under visit visa (if any) to attend the banks’ meeting. For the positive outcome, you are highly recommended to make more than one appointment per day of stay. We suggest you make 6 appointments for 2 days visiting during weekday.
You may seek advice from company secretary firms, you will be charged for business account opening arrangement service, you will receive insight and updated information of HK banks (there are over 20 of them providing business account to companies globally including HK, list of HK banks is here) to select the appropriate banks to approach, and arrange the meetings and documentations for the best result and within the shortest time frame.