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Know Your Customer (KYC) Requirements in Hong Kong: What You Need to Know
With the rise of digital banking services and online trading of equities and exchange-traded funds (ETFs) in Hong Kong, financial institutions and businesses are under increasing pressure to ensure they comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. At the heart of these efforts is Know Your Customer (KYC), a critical process that helps prevent financial crimes and terrorist financing.
What is KYC in Hong Kong?
In simple terms, KYC is the process of gathering a customer’s personal data and verifying its accuracy to establish a connection with them. It involves identification and verification of the client’s data, which is essential for building trust and ensuring compliance with regulatory requirements.
Hong Kong Government Regulations on KYC
The Hong Kong government has released several guidelines for KYC, including:
- HKMA Guideline on AML and CFT (For Authorised Institutions) in 2018
- SFC guideline on Anti-Money Laundering and Counter Financing of Terrorism (For Licensed Corporations) last September 2021
- Cap. 615 Anti-Money Laundering and Counter-Terrorist Financing Ordinance, which emphasizes the requirements relating to customer due diligence (CDD) for financial institutions and designated non-financial businesses/professions.
Hong Kong KYC Requirements
To comply with Hong Kong regulations, businesses must collect and verify the following ID data from natural persons:
Identification Information
- Full Name
- Date of Birth
- Nationality
- Unique Identification Number (e.g., identity card number or passport number) and document type
Address Verification
- A current utility bill (such as gas, electricity, telephone or mobile phone bill)
- Bank statement (issued no more than three months ago that shows the End-user’s address and name)
- Document issued by a government department that shows the applicant’s name and address
How to Verify Information
To verify this information, businesses will require clients to provide supporting documents, such as Hong Kong identity cards or passports and billing statements. For proof of income, this can range from bank statements where funds are being deposited to company-issued payroll.
Hong Kong Fintech 2025 Strategy
In June 2021, the HKMA created a strategy to complete the digitalisation of financial institutions by 2025. This includes building new and improved measures to combat money laundering and fraud challenges that will arise with digitalization. The SFC updated its guidelines in September 2021, which include:
- Evaluating the risks associated with new or existing business relationships
- Establishing institutional risk assessment
- Identifying indicators for suspicious transactions involving third-party deposits and payments
- Updated CDD requirements and measures for cross-border correspondent banking relationships
Conducting KYC & AML Checks in Hong Kong
In a rapidly evolving Hong Kong financial industry, it is essential to stay up-to-date and comply with the country’s guidelines. Lanturn can assist you not only with our fund formation and administration services but also with conducting KYC & AML checks.
Our KYC & AML checks come in two tiers:
Basic Checks
- Verifying information obtained on the identity of potential/existing clients, shareholders, and investors.
Enhanced Checks
- For funds involving higher-risk customers, where a deeper understanding of the target individual/entity’s activities is needed to mitigate associated risks.
We offer one-off or ongoing KYC and AML checks for Hong Kong fund managers, and investors. Our services include:
- Collection and verification methods that comply with Data Protection regulations
- Four-eyes quality check for all documents/information collected
- Secure digital record-keeping
If you’re interested in availing of our KYC/AML services in Hong Kong, be sure to get in touch with us today!