How do banks’ review mechanisms work?

In the past two months, I have received several enquiries from the business community regarding rejection of applications for opening business accounts.  I advised the enquirers to try the review mechanisms under which the banks concerned would re-examine the applications.  The feedback so far suggested that some applicants have then succeeded in opening bank accounts, while some were still unsuccessful.  Let me share with you two stories of appeal with very different results.

The first story was about an overseas entrepreneur who approached a retail bank for opening a business account for his trading company in Hong Kong.  After submitting the documents required, the application was turned down by the bank.  Frustrated by the outcome, the entrepreneur approached the Hong Kong Monetary Authority (HKMA) for assistance.  The bank then explained that the application was rejected because the company’s mode of operation and directorship structure were unclear.  At my advice, the entrepreneur lodged an appeal under the bank’s review mechanism.  After the bank’s re-examination, and with additional documents provided by the entrepreneur to clarify the ownership and control structure of the company, the bank informed him a week later that a business account could be opened for his company.

The second story was about another overseas entrepreneur who established a new company in Hong Kong to sell products sourced from Mainland China to other parts of the world.  The entrepreneur applied to a bank in Hong Kong for opening a business account.  After submitting the documents required, the application was turned down.  The entrepreneur was unhappy and wrote to the HKMA for assistance.  The entrepreneur followed my advice to lodge an appeal under the bank’s review mechanism, and provided to the bank additional information to support his application.  Two weeks later, the bank informed him that it maintained its decision to reject his application because it has confirmed a piece of public news about him which raised concerns about financial crime risk, and in respect of which he was not able to explain.

You may ask why the two seemingly similar cases of appeal under the banks’ review mechanisms have ended up with entirely different results.  Indeed, the review mechanism has no magic in itself, and it does not guarantee a positive outcome.  Nevertheless, the review mechanism is overall useful.  There are two benefits that the review mechanism can bring to the account opening process.  First, for the application itself – the application is further reviewed at a more senior level of the bank and the customer can provide additional documents and information or answer questions that the bank may have to satisfy the customer due diligence requirements.  Second, for the account opening process – banks are given a chance to re-examine the process vigorously: a lot of substantiated appeal cases could be a warning sign to the bank, suggesting that it should review its account opening process to identify areas for improvements and staff training needs to enhance customer experience.  The review mechanisms of a list of banks in Hong Kong are shown on the HKMA webpage:
http://www.hkma.gov.hk/media/eng/doc/other-information/ac-opening/attachment1_review_mechanism.pdf

If you have tried banks’ review mechanisms, please write to us at accountopening@hkma.gov.hk to share your experience.  Your feedback would be useful in helping us to consider appropriate follow-up work.

Last revision date : 26 August 2019