I am writing to set out the Monetary Authority's views on the practice whereby some authorised institutions take customers' passports for custody when making loans to them.
As you will be aware, while money lenders are prohibited by the Money Lenders Ordinance from engaging in this practice, there is no similar prohibition in the Banking Ordinance applying to authorised institutions. The Monetary Authority is of the view, however, that if authorised institutions do engage in this practice, they should observe the following guidelines:
The Monetary Authority will monitor adherence to these guidelines during the course of on-site examinations of institutions and discussions with their management.
I would be grateful if you would circulate this letter for the information of your members. I am writing in similar terms to the Chairman of the Deposit-taking Companies Association.