While other regional authorities have continued to prey on the crypto industry, Hong Kong has continued to see potential in the industry, therefore, expressing support and working towards assisting in boosting 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 perceived high risks and concerns around anti-money laundering regulations. In response, the Hong Kong Monetary Authority (HKMA) has made some moves addressing the issue.
Hong Kong Authority Paves Way For Easy Crypto Bank Account Opening
According to a statement published on 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 is no legal or regulatory requirement prohibiting them from providing banking services to virtual asset (VA) related entities.
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The regulator emphasized the importance of a risk-based approach when conducting customer due diligence (CDD). The approach involves differentiating the risk levels of customers and applying proportionate CDD measures, rather than a “one-size-fits-all” approach that can result in account opening applications being rejected unnecessarily.
We have also reminded banks to adhere to a ‘risk-based approach’ when conducting customer due diligence (CDD) and avoid unnecessary processes and refrain from adopting a ‘one-size-fits-all’ approach to reject account opening applications.
According to the authority, by implementing effective anti-money laundering (AML) measures, banks can treat customers fairly and enhance access to basic banking services through transparent, reasonable, and efficient procedures.
Implementation Of Risk Based Approach Application
Furthermore, the authority referred to Simple Bank Account (SBA) Arrangement, using it as an example of a risk-based approach in action. Derived from traditional banking deposits, the SBA arrangement was launched in 2019.
It provides basic banking services such as deposits, withdrawals, local, and cross-boundary remittances to eligible corporates based on their actual operational needs.
With lower transaction volumes and narrower service scope, banks can apply less extensive CDD measures, making it easier for businesses to access banking services. Since the launch, approximately 13,000 such accounts have been opened by banks, with an average of around 3,000 accounts being opened each year.
The HKMA encourages banks to continue offering 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.
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Moreover, Hong Kong’s banking industry is a key contributor to its economy, and the HKMA’s efforts to address challenges in account openings are critical to supporting crypto businesses in the region.
With the increasing demand for banking services from newly established or overseas companies, it’s essential that banks implement effective AML measures while providing fair and efficient access to banking services.
By adhering to the risk-based approach and implementing the SBA arrangement, banks can help drive economic growth and support businesses’ exploration of new opportunities.
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