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First digital bank launches

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  1. #41
    Quote Originally Posted by greenmark:
    Not likely.

    As far as I know most VBs will only take transfers with their customers' accounts with other Hong Kong banks such as via FPS. They won't allow transfers to or from third party accounts. The idea being that the VBs don't need to run any KYC because customers' linked banks already have done all that. It limits what the VBs can offer to customers, hence they don't even offer ATM cards or credit cards.
    Then the VBs do not understand their AML obligations. Receiving funds through other banks helps considerably with AML compliance and does reduce regulatory risk but it is not considered an excuse for failing to do their own due diligence.
    tf19 and rkenia852 like this.

  2. #42

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    Quote Originally Posted by traineeinvestor:
    Then the VBs do not understand their AML obligations. Receiving funds through other banks helps considerably with AML compliance and does reduce regulatory risk but it is not considered an excuse for failing to do their own due diligence.
    I shouldn't say they won't do "any" KYC, but if you see all ZA requires is a HK ID card. As long as that matches the linked bank then all the rest is assumed compliant. HKMA has decreed open APIs for sharing information including employment, income and transaction history.

    As for Anti Money Laundering, there are two key points: 1) they'll still flag large deposits and 2) Money Laundering is pretty much the only thing driving the HK economy.

  3. #43
    Quote Originally Posted by greenmark:

    As for Anti Money Laundering, there are two key points: 1) they'll still flag large deposits and 2) Money Laundering is pretty much the only thing driving the HK economy.
    Sorry, but I have to disagree on both of these points.

    People trying to launder money know the triggers for reporting to JFIU as well as anyone and a lot of money laundering involves small amounts of money (sometimes very small amounts) – see the Westpac case in Australia for one prominent example – to avoid detection.

    As to the second, there are many things driving the HK economy (property, logistics, finance etc). Claiming that "Money Laundering is pretty much the only thing driving the HK economy" is simply not remotely credible.
    tf19 likes this.

  4. #44

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    Quote Originally Posted by traineeinvestor:
    Sorry, but I have to disagree on both of these points.

    People trying to launder money know the triggers for reporting to JFIU as well as anyone and a lot of money laundering involves small amounts of money (sometimes very small amounts) – see the Westpac case in Australia for one prominent example – to avoid detection.

    As to the second, there are many things driving the HK economy (property, logistics, finance etc). Claiming that "Money Laundering is pretty much the only thing driving the HK economy" is simply not remotely credible.
    I believe greenmark may be referring to the fairly lax, by global standards, AML requirements on cash rather than on what businesses such cash funds. Hong Kong only in the last two years introduced the requirement to declare cash when entering - does anyone recall the numerous cash moving travellers being targeted and mugged once they enter Hong Kong?

    Anyways, back to Digital Banks, I am still not seeing how this can be any different from a mobile/ internet banking channel? Unless they want to re-enter higher risk/ return business segments and want to separate risk and capital constraints from their existing balance sheets. Knowing bankers, this is more likely.

    Anyone else - telcos, tech companies, retailers - will likely want to benefit from the higher cost of acquiring contactable customers. Most people are more connected than ever, but at the same time, we are the most least contactable ever!

  5. #45

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    Quote Originally Posted by traineeinvestor:
    Then the VBs do not understand their AML obligations. Receiving funds through other banks helps considerably with AML compliance and does reduce regulatory risk but it is not considered an excuse for failing to do their own due diligence.
    I believe they do.. simply claiming that "they only require a hkid == they don't do kyc" is a simplification. They may use that hkid info for a lot of other checks... triggered based on events assumed as risky.

    I don't think they're that naïve.
    shri and traineeinvestor like this.

  6. #46

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    Original Post Deleted
    They may *not need* to verify the address, depending on what type of services they offer you, e.g. simple savings account, low limits, no cards.

  7. #47
    Quote Originally Posted by alexdown:
    They may *not need* to verify the address, depending on what type of services they offer you, e.g. simple savings account, low limits, no cards.
    Actually the requirement to verify an address was removed in 2017 (which surprised me when I checked). Link to HKMA circular below. However, at least some banks (possibly most) are still asking for it because it is still required by overseas regulators.

    As a commercial matter, if there are any credit facilities being offered an address proof would be a must even if the HKMA no longer requires it.

    https://www.hkma.gov.hk/media/eng/do...20171011e1.pdf
    shri likes this.

  8. #48

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    Quote Originally Posted by alexdown:
    They may *not need* to verify the address, depending on what type of services they offer you, e.g. simple savings account, low limits, no cards.
    HKMA has been working so that banks with the same customer share information about that customer to each other.
    So if a VB requires you to link to another HK bank account, the VB will get all that address info from the other bank.

    So instead of the customer providing a bank statement as proof of their identity, the VBs get that info directly from linked bank.

  9. #49
    Original Post Deleted
    Not based on that. The second bullet point still requires the bank to obtain the residential address of the customer - but this can now be provided by the customer without the need for verification through utility bills etc.

    I agree that most banks will still ask for this - if they do business in a place which still requires verification then they will impose the more stringent requirement across the entire group.

  10. #50
    Original Post Deleted
    I was surprised to find this. As a practical matter I'd expect most banks to still require it.

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