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How to open a business bank account in Hong Kong – all you need to know

Posted by: Kristina Knut
Category: Business in China

Hong Kong has long been an enticing international business hub – not only is it one of the most dynamic cities of the world, but also a place where the East and West meet.

No wonder that these abundant opportunities have attracted many foreign investors to set up their base in Hong Kong.

Data shows that more and more bank accounts are being opened in Hong Kong. However, it is still regarded as one of the toughest places in the world for opening a company bank account. A recent study by The Hong Kong Institute of Chartered Secretaries (HKICS), published in July 2018, supports these claims. Namely, the survey results indicate difficulties with opening a bank account in Hong Kong, especially if the application has been submitted by a start-up, small and medium-sized enterprise (SME) and/or a foreign customer. This is due to banks’ customer due diligence (CDD) requirements, addressing fundamental anti-money laundering and counter-financing of terrorism (AML/CFT) risks.

As opening a bank account in Hong Kong is often a vital step for setting up a business-presence in Hong Kong, these complicated procedures can seem disheartening. This is why we’ve put together a simple overview of the process and the required documents. Continue reading to learn more and be prepared!

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Main difficulties faced when opening a bank account in Hong Kong

Referring to the HKICS survey, the respondents agreed that overall, it was more difficult to open bank accounts. They claimed it was a broader issue, rahter being confined to one or two major banks. The top five challenges and issues related to opening new bank accounts were:

  • Challenges with satisfying the bank’s requirements for documents.
  • Difficult to open an account for foreign nationals.
  • The approval process for opening an account was not transparent/straightforward enough.
  • No clear reasons or explanations given for account rejection.
  • Complicated to open accounts for smaller revenue-generating customers.

Additionally, many respondents were not aware of existing review mechanisms for re-assessing rejected applications for opening bank accounts.

The study results revealed and addressed the difficulties for opening accounts, which prompted the Hong Kong Monetary Authority to put up a list of banks willing to offer services to foreign SME’s and start-ups. The list of about 20 banks will be provided to investors through the local government’s business promotion arm, InvestHK. Additionally, the HKMA urged financial institutions to provide business-friendly banking services to foreign investors. The HKMA will also start conducting spot checks for local banks to ensure they follow official banking guidelines.

The challenges have been addressed and it’s likely that the future will bring more reforms for investors in Hong Kong. Meanwhile, best thing an applicant can do is to familiarize self with the application process and be prepared.

Guide to opening a bank account

The points and suggestions below are general – thus, keep in mind these may vary depending on the bank chosen. However, by following this outline and presenting the required documents, the process should take about 2-3 weeks to complete.

 

 

With the strict anti-money laundering rules, one cannot open a bank account online. This would require the applicant to make a prior appointment with the manager of the bank in person. After the initial appointment, a preliminary review will be carried through. This phase can include interviews, either via phone or in person, or the applicant will be required to submit supporting documents along with their application.

Once the preliminary review has been successfully passed, the parties must sign bank application forms and documents. In some cases, certified and true copies of shareholder ID’s. An initial depots is required at this stage as well – the exact amount can vary, depending on the bank.

When all of the above has been done, the application will be send for a department review. The review may take approximately one-two months and expect the review department to request for further supporting documents.

Tips and suggestions to smooth the opening process

There are a few things you can do to prepare before applying for an account, which can boost you chances in getting the green light.

Possibly one of the best tips would be opening a business account with the HSBC bank in any country and develop a 6-12 month relationship of trading with them. By doing so, the bank will have enough records on your business and auhtorization, and the chances of opening a bank account in Hong Kong increases.

Additionally, you can increase your chances of success by targeting and modifying your adverts to cater to Asian customers and begin making sales within Asia.

Of course, it goes without saying that make sure your paperwork is in check – all of the documents you present to the bank must portray your business from the best side. Companies with a good standing, a stable cash flow, an audited account and acitvely conducting business leave a good impression and the bank will regard it as favorable.

Benefits of opening a business account in Hong Kong

While the process for opening a bank account is time-consuming and requires quite a bit of paperwork, it’s worth the effort. Consider the below points on how a Hong Kong bank account can be beneficial for your business!

  • Sound banking system – many major international banks have an established presence in Hong Kong, such as HSBC, Citibank, Standard Chartered Bank, Bank of China etc. Hong Kong also has a good reputation for their high standard banking regulations, making it a safe place for banking. The identity of the account holder and transaction information are subject to very high standard of confidentiality.
  • Lower Minimum Bank Account Balance – banks in Hong Kong require the minimum bank account balance to be HK$ 30 000. The monthly service fee is only HK$ 100 for balance below the minimum account balance.
  • Free Capital Transfer – as one of the world’s most dynamic economies, Hong Kong is driven by principles of free trade and free markets with no foreign exchange controls. There are no restrictions for international capital transfers, including transferring profit of dividend to homeland.
  • RMB Trade Settlement – as of 2009, Hong Kong banks have been approved to handle RMB settlement for cross-border trading with Mainland China.
  • No Tax on Interest – no tax on interest earned in a bank account in Hong Kong.
  • Convenience – online and mobile banking are available for use, anytime and anywhere in the world.

 

Looking for a trusted partner to help you navigate opening a bank account in Hong Kong? Contact us! Our experienced team has the necessary expertise to guide you through the process – have a look at the services we offer.

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Author: Kristina Knut

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