Hong Kong Authority tackles the challenges of account opening
While other regional governments have continued to prey on the crypto industry, Hong Kong has continued to see potential in the industry, therefore, express support and working to help increase crypto adoption.
Given Hong Kong’s continuous growth as a crypto hub, many crypto companies have turned to the region to establish a presence and open bank accounts to explore new business opportunities.
However, some companies have found it challenging to open these specific accounts due to high risk and concerns about anti-money laundering regulations. In response, the Hong Kong Monetary Authority (HKMA) has made some moves to address the problem.
Hong Kong Authority paves way for easy crypto bank account opening
According to a statement published Thursday, the Hong Kong Authority has been actively discussing the challenges of opening a bank account for crypto firms.
The HKMA said it had reminded banks in the region that there are no legal or regulatory requirements prohibiting them from providing banking services to virtual asset (VA)-related entities.
Related reading: Hong Kong Express support for crypto as US regulator continues to crack down
The regulator emphasized the importance of a risk-based approach when carrying out customer due diligence (CDD). The approach involves differentiating the risk levels of customers and using proportionate CDD measures, rather than a ‘one-size-fits-all’ approach which can lead to account opening applications being rejected unnecessarily.
We have also reminded banks to follow a “risk-based approach” when conducting customer due diligence (CDD) and avoid unnecessary processes and refrain from using a “one-size-fits-all” approach to rejecting account opening applications.
According to the authority, by implementing effective anti-money laundering (AML) measures, banks can treat customers fairly and improve access to basic banking services through transparent, affordable and efficient procedures.
Implementation of risk-based approach application
Furthermore, the authority referred to the Simple Bank Account (SBA) Arrangement, using it as an example of a risk-based approach in action. Derived from traditional bank deposits, the SBA scheme was launched in 2019.
It provides basic banking services such as deposits, withdrawals, local and cross-border transfers to eligible businesses based on their actual operational needs.
With a lower transaction volume and narrower scope of services, banks can use less extensive CDD measures, which makes it easier for companies to access banking services. Since the launch, banks have opened approximately 13,000 such accounts, with an average of around 3,000 accounts opened each year.
The HKMA encourages the banks to continue to offer basic banking services to businesses with transparent, reasonable and efficient procedures. By implementing the risk-based approach and providing access to basic banking services, the HKMA hopes to support Hong Kong’s economic growth and help crypto companies explore new business opportunities.
Related reading: Hong Kong to raise $100 million to fund crypto industry growth
Moreover, Hong Kong’s banking industry is a major contributor to the economy, and the HKMA’s efforts to address account opening challenges are critical to supporting crypto businesses in the region.
With the increasing demand for banking services from newly established or foreign companies, it is important that banks implement effective AML measures while providing fair and efficient access to banking services.
By following the risk-based approach and implementing the SBA scheme, banks can help drive economic growth and support businesses’ exploration of new opportunities.
Featured image from Shutterstock, chart from TradingView
