Hong Kong Warns Banks on Heavy-Handed Customer Due Diligence

ifc-1215688-600-190.jpg

The Hong Kong Monetary Authority has warned banks that applying disproportionately stringent due diligence on customer accounts risks excluding legitimate businesses from basic financial services.

“Part of the problem is that the new regulatory environment coming from the U.S. and Europe has made it very costly for banks to do due diligence with customers,” Richard Vuylsteke, president of the American Chamber of Commerce in Hong Kong, said by phone. “Some of the banks don’t want to do that as the cost of risk assessment is now very high.”

Banks have been closing customer accounts for about a year, with the hardest-hit segments being small and medium-sized enterprises and startups, Vuylsteke said. His organization was among 29 international chambers of commerce that raised the issue at a mid-year meeting with the HKMA, he said.

Read more at Bloomberg