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Bank of China, Hong Kong is a commercial bank regularly used by businessmen. We would like to let you know what is the backbone that makes up its compliance and their usual documentation required.
Backbone for FI’s Compliance in Hong Kong Effective from 1 April 2012, Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance, Cap. 615 (“AMLO”) laid down the anti-money laundering backbone to financial institutions (FIs) in Hong Kong and imposes FIs’ customer due diligence (CDD) requirements. Summarized below AMLO and HKMA guidelines for FIs in Hong Kong :
AMLO Guidelines Screen Out Undesirable Parties The following individuals / entities are unacceptable for account opening applications:
1. Person, individual or entity that is subject to targeted financial sanctions (pursuant to UN Security Council resolutions). 2. Customer with unverifiable identity (e.g. anonymous customer). 3. Shell bank. A bank that has no physical presence in the country in which it is incorporated and licensed. 4. Customer applying to open an account with third-party beneficial owner without a valid reason. 5. Customer with suspected involvement of money-laundering/ fraud cases. 6. Bankrupt individual (except with account opening permission issued by the Official Receiver’s Office).
Enhanced Due Diligence (For High-risk Customers) AMLO specifies that “an FI must, in any situation that by its nature presents a higher risk of money laundering/terrorist financing, take additional measures to mitigate the risk of ML/TF.” The additional measures may include:
1. obtaining additional information on the customer (e.g. connected parties, accounts or relationships) and updating more regularly the customer profile including the identification data. 2. obtaining additional information on the intended nature of the business relationship (e.g. anticipated account activity), the source of wealth and source of funds. 3. obtaining the approval of senior management to commence or continue the relationship. 4. conducting enhanced monitoring of the business relationship, by increasing the number and timing of the controls applied and selecting patterns of transactions that need further examination.
Source of Wealth and Source of Funds AMLO also specifies that Banks must “take reasonable measures to establish the customer’s or beneficial owner’s source of wealth and the source of the funds… ” before commencing or continuing a business relationship.
HKMA’s guidance on verifying source of wealth and source of funds is:
1. Verify against publicly available information sources. 2. Such as asset and income declarations, which some jurisdictions expect certain senior public officials to file and which often include information about an official’s source of wealth and current business interests.
In summary, longer processing time for FIs due to extra due diligence work performed, increased scrutiny and additional layer(s) of approval as a result of AMLO.
HKMA Guideline “Frequently Asked Questions on Customer Due Diligence” 1. Do all corporate customers need to provide business registration certificates? No, because it may not be applicable to every customer (e.g. Start-ups may not have one at the time of account application).
2. Is it a must to have a HK business address or to provide address proof of a specific type? No. Banks are expected to understand why a type of business address is provided or considered not applicable, taking into account the customer's business model or mode of operation.
3. Is it a must to establish source of wealth for every customer? No. It should be a risk-based approach.
4. Any specific CDD requirements for start-ups and SMEs? No specific requirement; banks should not adopt a one-size-fit-all approach.
5. Is it a requirement to 1) understand rationale for an overseas co. to establish business relationship in HK and to 2) take additional CDD measures if a company is incorporated offshore or has foreign directors/BOs? Yes, a standard CDD measure. 2) applications should not be rejected merely because the customer is established offshore or Directors/BOs are non-residents.
6. What if identification documents are in foreign language? Does the translation need to be performed by professional 3rd-party? Banks may obtain a translation from a reliable source, which may include technology solutions and commonly used translation tools.
Account Opening – a Robust Process at Bank of China, Hong Kong To comply with the AMLO and HKMA’s Guidelines, Bank of China (BOC) Hong Kong considers the following requirements and demands for below documents:
Information Required: 1. Individual Account (Mandatory) - Full Name, Date of Birth, Nationality, Identity Document Type & No. - Purpose and Reason of Account Opening - Source of Funds - Source of Wealth
2. Individual Account (Others): - Residential Address - Occupation/Business - Expected Transaction Amount/Month - Expected No. of Transactions/Month - Usual Transaction, Type of Bank Products and Services Required
3. Company Account (Mandatory): - Full Entity Name - Date and Country of Incorporation - Registration Number - Purpose and Reason of Account Opening - Source of Funds - Source of Wealth - Identity of Company Directors - Identity of Beneficial Owners
4. Company Account (Others): - Address of Registered Office and Operating Address - Identity of Authorised Signers - Business Nature/Goods & Services Provided - Mode of Operation - Location of Major Counterparties upstream Suppliers and Customers - Size of Company (e.g. no. of Stagg) - Expected Annual Transaction Amount - Expected Number of Transactions/annum - Usual Transaction Pattern, Type of Bank products and Services Required - Transaction Currencies - Company’s source of wealth and source of fund - Background of the Group (if Company belongs to one) - Main banker (if any)
5. Company Account (Supplemental info for Overseas Co.) - Reason(s) for opening account in Hong Kong - Details if business is conducted in other countries - Mode of account operation if person-in-charge not based in Hong Kong - Reason(s) if correspondence address not in Hong Kong - Other local banker (if any)
6. Supplemental Info In High Risk Situations - Person-in-charge's relevant experience in business/industry - Business plan - Reason(s) for starting the business - Source of start-up capital
Documents Required: 1. Company Registration Documents -Legal document relating to the formation of a company e.g. Certificate of Incorporation. -Legal document that proves the legitimacy of applicant’s business operations e.g. Business Registration Certificate. -Documents that define the directors’ responsibilities, business to be undertaken, and the means by which the shareholders exert control over the board of directors e.g. Memorandum and Articles of Association.
2. Directors/Business Owners/ Authorised Signatories’ Documents - Identification documents and Nationality Proof e.g. government issued ID/passport. - Proof of former/other names (if any) e.g. Deed Poll. - Residential address proof (within 3-months, in English or in Chinese).
3. Full Business Proof (Past and Present) 4. Business Plan (optional, subject to business model)
Need Assistance If you are interested in opening a bank account, we are ready to help you. Please contact us at info@intershores.hk or by whasapp at (852) 6499 4686.
Whatsapp : (852) 6499 4686 Phone : (852) 2186 6936 Email : info@intershores.hk
Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice. |
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