New Corporate Banking Standards in Hong Kong

To strengthen global efforts against tax evasion and money laundering, Hong Kong banks are preparing to comply with new international reporting standards under the OECD’s Common Reporting Standard (CRS). The CRS mandates that banks gather detailed client information, which will be automatically shared with government authorities worldwide. As a result, local banks have rolled out stricter account-opening policies to handle the costs of compliance and information management. This article aims to give you HK corporate bank account tips to navigate these changes.

Understanding the CRS and Its Impact

The CRS requires banks to collect and share a broad range of information on each client, which must be available to other governments around the world. Due to these new standards, Hong Kong banks are introducing tougher screening processes for both new and existing clients.

New Bank Policies and What They Mean for Account Opening

In anticipation of CRS requirements, HSBC has already implemented stricter policies for corporate bank account opening, with other banks likely to follow suit. Going off of HSBC’s updates, here’s an overview of what different types of applicants might expect under these new policies:

1. Hong Kong Resident Entrepreneurs

If all shareholders and directors are Hong Kong residents, opening an account should be relatively straightforward. However, all applicants must still submit the necessary information required by the bank.

2. Subsidiaries of Foreign Companies

For foreign companies that are already HSBC clients in their home countries or that can provide tax reports for their holding companies, the process should be easier. However, smaller foreign businesses or those without tax records may face more documentation requirements.

3. Individual Foreign Applicants

For individual foreign entrepreneurs with business activities in Hong Kong, especially those who are existing clients of the bank they want to open an account with in their home countries or who can provide a tax report and a significant business turnover, the application may more likely to be considered. Banks are typically more willing to accommodate applicants with established business backgrounds.

Additional Requirements to Maintain Compliance

To keep up with the CRS standards, banks will periodically request updated information from companies holding accounts with them. Failure to meet these requirements could result in account closures. In addition, the increased demands of information reporting may lead to higher bank account fees. It is always advisable to confirm the latest costs and requirements with your bank.

Key Information to Prepare for Account Opening

To ensure a smoother application process there are some main documents usually required which you can find in our article about opening a corporate bank account in Hong Kong. In light of the new standards you should also prepare the following key information:

• Business Nature and Activity: A clear explanation of your business type, sector, and activity (e.g., trading medical devices between China and the U.S).
• Estimated Annual Turnover: Banks will need a projection of your company’s expected annual turnover.
• Overseas Connections: If your business is affiliated with listed companies overseas or in Mainland China, you should provide relevant details.

Preparing for a Successful Application

At the core of these new policies, banks want assurance that the businesses they work with are legitimate and of a sufficient scale to justify the administrative costs. Companies that lack a business track record, especially those set up by individual foreign shareholders, may face increased scrutiny due to potential risks related to money laundering or perceived low income levels. As such, it’s best to gather all necessary documentation and supporting information well in advance of your appointment.

Conclusion: Navigating New Bank Standards with Preparation

Though the process may be more demanding, a prepared application with clear, thorough documentation should have a good chance of success. For additional guidance, the iNCUBEE Team is available to help. Visit our website.