Fraudsters employ many different tricks. Nevertheless, no matter how their deception techniques have evolved, the key feature of their scams remains the same, which is taking advantage of people’s desire for convenience and high returns. Recently, there have been fraudsters claiming to be financial “advisors” and that they can open offshore bank accounts on people’s behalf, in order to get their hands on the money of those who fall for their tricks.
Although some of the foreign banks concerned were unknown, some people were deceived by those “advisors” and thought that those banks were financially sound. Some “advisors” even tried to solicit deposits by promising high deposit rates. However, after receiving the promised interest for a short while, the depositors could no longer get any interest payments. In the end, they were even unable to withdraw their principal and lost their hard earned money.
Under the Banking Ordinance, only licensed banks, restricted licence banks and deposit-taking companies (collectively known as “authorized institutions”1) which have been granted a licence by the HKMA can carry out banking or deposit-taking business in Hong Kong. Individuals or institutions are prohibited from claiming themselves as a “bank” or taking deposits from members of the public without the approval of the HKMA. Currently, there are more than 180 authorized institutions in Hong Kong. These institutions are subject to a stringent licensing regime and regulated by relevant laws and the HKMA.
In case of doubt about any entity claiming to be a bank or soliciting deposits from members of the public in Hong Kong, one should verify the authenticity of such entity and, if needed, confirm with the relevant bank and regulatory authority as appropriate. For example, one may refer to the register of authorized institutions and local representative offices (LROs) on the HKMA website (https://vpr.hkma.gov.hk/eng/regulatory-resources/registers/register-of-ais-and-lros/). One may also call the HKMA’s Public Enquiry Service hotline (2878 8222) in case of further doubt.
Besides, under the Banking Ordinance, a foreign bank wishing to establish an LRO in Hong Kong must fulfill stringent requirements, including that the bank itself is licensed and adequately supervised in its place of incorporation and the establishment of an LRO is subject to approval by the HKMA. Even if approval has been obtained to establish an LRO, the LRO must confine its major business to liaison activities with Hong Kong customers and cannot engage in any banking or deposit-taking business. Therefore, members of the public should be careful that some so-called “advisors” or intermediaries claiming to be conducting banking and deposit-taking business in Hong Kong on behalf of foreign banks may in fact be scammers carrying out unapproved illegal activities.
In meeting the prevailing regulations on combating money laundering, terrorist financing and tax evasion of the jurisdictions concerned, foreign banks may have various account-opening requirements. While some people may visit a foreign jurisdiction to open a bank account in-person, some people may choose to do so at a branch of that bank in Hong Kong or through an authorised professional (such as a lawyer, an accountant, or other notaries public). In entrusting a third party to open a bank account or place a deposit on one’s behalf, one must stay vigilant and fully assess the risks involved, noting in particular that offshore deposits are not protected under the Deposit Protection Scheme in Hong Kong. To learn more about the rights and interests of offshore deposits, one may enquire with the regulatory authorities of the jurisdiction concerned.
To avoid falling prey to any scams, we advise members of the public to verify the authorization status of any entity claiming to be a bank or an LRO before opening a bank account. When it comes to deposit schemes that look too good to be true, extra caution should be exercised. If there is any concern that one has fallen victim to fraud, report to the Police as soon as possible.
Stay vigilant, verify and steer clear of any traps.
Arthur Yuen
Deputy Chief Executive
Hong Kong Monetary Authority
30 August 2022
1 Hong Kong maintains a three-tier system of deposit-taking institutions. According to the amount and term of deposits accepted and the nature of the business, these institutions are classified into licensed banks, restricted licence banks, and deposit-taking companies and are collectively known as “authorized institutions”.
