How transparent are banks’ account opening processes?

I recently received an email from an overseas entrepreneur describing his experience in attempting to open a business bank account in Hong Kong.  Let me share it with you. 

The entrepreneur plans to set up an e-commerce business in Hong Kong.  Given the lack of experience in establishing presence overseas, he hired services from a company secretary firm in Hong Kong to help handle all the formalities, including opening a bank account.  The secretary firm quoted him a fee just for helping set up a meeting with a bank to apply for account opening.  To convince him that the fee was well justified, the secretary firm told him that the meeting with the account opening bank was necessary, as banks in Hong Kong would not disclose their specific compliance review procedures in advance, and the banks had to meet the applicant to assess what information and documents would be required.  Also, he was told that it would take a lot of time and efforts to arrange the meeting.

Understandably, the entrepreneur found it weird that banks in Hong Kong did not disclose their procedures and information and documentation requirements for opening bank accounts.  He also considered the fee quoted by the secretary firm excessive, given that his company is a small business and that the fee was non-refundable regardless of the outcome of the account opening application.  He therefore wrote to the Hong Kong Monetary Authority (HKMA), as the regulator of banks, to find out why banks can operate a process that a client is not allowed to know about, and what it really takes for an overseas start-up like his case to open a bank account in Hong Kong.

From this and other stories that I gathered from small business owners, he is definitely not the only one who got puzzled by the seemingly very difficult bank account opening processes in Hong Kong.  Admittedly, compared with five to ten years ago, the account opening process is more complex and requires longer time now, causing inconvenience, and sometimes frustration, to customers globally including in Hong Kong.  This is because international efforts in combatting illegal activities have stepped up significantly, and banks are now required to follow tighter international standards and apply more stringent customer due diligence measures on new customers.  In view of this, the HKMA puts a lot of emphasis on guiding banks that while they are combatting illegal activities in a proportionate and “risk-based” manner, they should treat customers fairly and make the account opening processes transparent, reasonable and efficient.

I do appreciate his concerns and have shared with him some relevant information about account opening and maintenance procedures, information and documentation requirements and contact details of banks which can be found on the HKMA webpage.  He then realised that he could find the basic information about account opening procedures and information requirements on the respective websites of all 20 retail banks, which also provided hotlines to directly answer customer enquiries.  He also noted that some banks offer on-line applications and on-line appointment making. 

Another common concern of businessmen based overseas is that it is not user-friendly for them to make several trips to Hong Kong for opening a bank account.  In this respect, I would like to share with you that some banks have recently launched what we may call a “pre-vetting” process for account opening, so that an applicant may first submit the documentation and information required for opening an account to the bank by mail, fax or email, and the bank will “pre-screen” or “pre-vet” them before arranging the applicant to have a face-to-face meeting in Hong Kong.  Hopefully, this change in process flow would be welcomed by customers based overseas.

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Last revision date : 26 August 2019