All You Need To Know About Hong-Kong Bank Account Compliance

One of the best ways of safeguarding your hard earned cash from myriads of risks is opening an offshore bank account. The political interference with the banking systems in most countries has made people start looking for alternatives. But this is not the only reason for seeking an offshore bank. Other risks include the danger of getting drawn into a lawsuit, accounts getting frozen and very low-interest rates.

Hong Kong has stood out as a banking paradise because of its stable political environment and stable banking system. For years, many people have been trooping to Hong Kong to open their bank accounts because of enhanced security, support from the government, subtle tax regime, and higher interest rates.

However, things have changed over time. Unlike in the past, the Hong Kong administration has passed new policies to filter cash arising from fraud. More importantly, the administration has passed the CRS framework that has added new rules for Hong-Kong bank account compliance. Here is everything that you need to know.

Declaration on how the account is will be used

Bank accounts are personal entities. But the threat of money laundering and fraud has made Hong Kong redefine how the accounts are operated. Now, Hong-Kong bank account compliance requires account holders to declare how they will use their accounts. This means that you have to give ample reasons for opening an offshore account. For example, if you simply want to save or use the account for putting holiday cash, the bank will be vigilant. You cannot move outside this established objective.

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Corporate accounts have to provide supporting docs about their operations

For those opening corporate accounts, the bank compliance rule is that the nature of the business has to be vividly brought out. You need to demonstrate the following before getting the account;

  • The nature of the business you are dealing with
  • Types of clients to expect
  • The amount of cash you anticipate handling
  • Expected profit and loss targets for the business

If there are major changes such as landing a big contract that involves dealing with a lot of cash, you will be required to go back to the bank and provide details.

Full disclosure of personal tax details back at home

The recent passing of CRS framework in Hong Kong has added a new requirement for Hong-Kong bank account compliance. Today, banks want to get more details about your tax compliance back at home. Under the CRS framework, Hong Kong committed to identifying accounts that are at greater risk of avoiding paying taxes back at home. Therefore, you will be required to provide additional information about tax compliance, proof of address, and references.

Prompt follow-up on suspicious activities

Banks have been tasked with the role of carrying due diligence by following all accounts in their system. This means that every transaction is being followed closely and must be in line with the prospects given at the time the account was opened. For example, if more deposits or transactions fall outside the prospects you indicated when opening the account, the bank will call you directly asking for details of the additional transactions.

Hong Kong is doing everything possible to ensure it maintains the great name that has taken years to build. As a financial hub, the new Hong-Kong bank account compliance requirements target keeping fraudsters and tax evaders away completely.