In the past, around 10 years earlier, company setup and bank account opening were a piece of cake, everything could be done within a week. Since 2014, customers started experiencing hard time in bank account opening and Know Your Customer (KYC) process became mandatory in all banking and financial institutes.
Background of Know Your Customer (KYC)
The main purpose of KYC is quite straight forward, mainly are:
Anti-Money Laundering (AML); and
While underlining, for detection of tax evasion corporation in a worldwide scale. To facilitate with, the OECD (Organisation for Economic Co-operation and Development) established a reporting standard for all country members to follow, which each country further develops their own due diligence requirements as monitoring and recording mechanism.
What to monitoring?
The scope of coverage is very clever, basically all banks, financial institutes and any other related industry in relation to money transactions are required to adopt the standard, where nowadays it further extends the coverage to all trust or company service providers, which is the tools/vehicles providers of money transactions.
How to monitoring?
Of course, the detail on how we operate to fulfill the KYC requirements are more complex, yet, we are pleased to share a little bit of its concept, which constitutes of three (3) parts:
The Corporate Structure - entity is not considered as independent, but only a part within the hierarchy;
Individuals behind the structure - despite the company itself, all ultimate owners are required to be identified;
Business activities involves - where the client needs to explain in detail all sort of business activities (money transactions) involved in the business;
Organization Chart certified by the Director. If the structure is complicate, further corporate documents for verification purpose will be required;
Certified Passport and residential address proof (any letter / statement / document should be issued within 3 months) of individuals, certified bodies could be lawyer, notary public, government authorities, CPA, bank and other recognized financial institutes;
Business documents, such as company website, bank statements, agreement, contracts, corporate search reports … etc;
Maintains, records, judges and reports
Of course, if we detect any specious business activity, we have the obligation to report to law enforcement for further investigation;
Even nothing to report, we are required to maintain and record the KYC documents for law enforcement to access at any time;
Despite of self-declaration, the customers need to provide relevant “proofs”, mainly documentations in the whole KYC process for record keeping and that’s why it is more and more difficult for start-up business to open bank account and we can provide relevant assistance by interview the customer to see how you can deliver your own factual evidence for the bank to consider your application.
Hopefully, this article allows you a better understanding why, and the rationale behind on why we need to ask you more questions than before, and take longer period to set up a simple company for you. Anyhow, if we failed to comply and fulfill the KYC requirements, other than heavy penalty, we will also be charged of obstruction of justice, and even a co-partner of the crime, therefore, this is essential for us to upkeep the standard.
Any additional information you would like to know, please feel free to drop us an email:- firstname.lastname@example.org. In addition, we dig out below materials in case you need a little more insights.
OECD - Automatic Exchange of Information
HKMA – Account Opening
HKMA – Guideline on Anti-Money Laundering and Counter-Terrorist Financing
Guidelines – TCSP Licensee
HKMA – FAQ on Customer Due Diligence