You have a foreign-owned business in Hong Kong, but you are experiencing problems opening a business bank account for it?
We have heard that a couple of freelancers were struggling to open one in the past.
This comes as a surprise to us as we have never had any problems opening one for our clients (1000 non-resident clients already).
So if you are trying to open a business bank account or trying to choose the right service provider to open it for you, then read these tips on how to properly qualify whether your service provider will be able to open a business bank account in Hong Kong.
Tip 1: Having knowledge about the KYC – procedure
Explanation: What is KYC Procedure for opening business bank accounts in Hong Kong?
The KYC procedure is also known as ‘Know your customer’. It is a process for banks to determine whether you are eligible to open a bank account with them.
Especially in countries with anti-laundering laws to prevent illegal money transfers, they have very strict rules who can open a bank account.
As a baseline, most Hong Kong banks will need your proof of address, a passport scan, and your company’s documents in order to open a bank account in Hong Kong for your Hong Kong company.
Reasons: Why should a bank account service provider in Hong Kong know about KYC procedures?
It is important for your service provider when opening a bank account for you to know about the KYC procedure at the banks because of three reasons:
- If your documents are not correct or not complete, they will reject your application.
- Once rejected, it becomes harder to be granted a business bank account for the second application.
- It can take a lot of time and stress if the process is not known beforehand and this would delay your business operations.
Example.
We received a client from another agency who was rejected by the bank due to a misunderstanding of the nature of his business. The agency did not provide proper advice or assistance during the application process. The client offered SEO services specifically for a gambling company and had no direct involvement in gambling activities. However, he was not reminded by the agency to focus solely on his SEO services and to avoid mentioning any gambling elements. As a result, he was immediately rejected by the bank because the system flagged his application for potential involvement in gambling.
Tip 2: Having served many foreign clients for bank openings
Explanation: What is a foreign client?
Many Hong Kong company’s business owners may not be from Hong Kong or live in Hong Kong. They still may own a Hong Kong company and be 100% shareholder.
Usually, they are called non-resident Hong Kong company owners as they do not reside/live in Hong Kong.
Reasons: Why should a bank account service provider in Hong Kong have served many foreign clients?
Just like the KYC procedure, it becomes even more important to know all these procedures for foreign and non-resident clients because the banks will have a closer when the person does not live in Hong Kong but still pursues a Hong Kong business.
Example.
For example, sometimes our clients are asked the following questions from the bank teller:
- “Why do you particularly want to open a business in Hong Kong?”
- “What kind of relation do you or your business have with Hong Kong?”
- “What is the operation cycle of your business?”
- “Where do you do your principle activities?
- “Who are the ultimate beneficial owners?
- “What is your source of fund to start the business?”
- “Can you provide us with your business plan or proposal?”
Being prepared for such questions, and how to answer these, is very important.
Depending on which bank our clients choose, we already know what questions will be asked.
Tip 3: Knowing hacks to facilitate bank openings
Explanation.
Like anywhere in the world, if you know certain things and tricks in Hong Kong can be powerful.
Reasons.
Knowing a few tips and tricks around how to open a bank account in Hong Kong can help you to be much faster and at some point, even need less documents.
Example.
For example, we do not advise our clients to open a bank account with a traditional bank such as HSBC at the very start of the business. For the start of the business, we recommend using a fintech bank such as Airwallex because
- You do not need to be in person in Hong Kong to open a bank account
- It is faster (it takes 5-7 days)
- It needs less documents for the KYC procedure
- It is backed up by traditional banks to secure financial stability
- It provides both virtual and physical debit cards for free.
In case you want to open a traditional bank later, having opened a business account with a fintech company will make the procedure with traditional banks much easier because they trust that the fintech bank has already validated your identity and business operations.
Tip 4: Having a Hong Kong network
Explanation.
As anywhere in the world, having a strong network in Hong Kong with bank tellers, tax officials, and lawyers, it is very helpful to skip the queue.
Reasons.
If you know banks and bank tellers, you will always be updated on KYC rules and what to pay attention to.
Also, if it comes from the same network, banks will make the opening of the bank account easier.
Example.
For our clients, we usually send their applications to the bank tellers we already know. This approach makes the process faster and less hectic, as we understand their needs and requirements. Additionally, in many cases, the bankers proactively contact us for further clarification during the KYC process, rather than simply rejecting the application if they identify any red flags.
Tip 5: Having a good reputation in Hong Kong
Explanation.
Having a good reputation in Hong Kong such as being a lawyer or a CPA can open many doors to banks and government departments.
Reasons.
Banks and government officials trust that lawyers and CPAs work only with reputable clients. Therefore, they will be more inclined to trust you. Keep in mind that you won’t be the only client of your agency or CPA. If they have a bad reputation and are not serious about client quality control, it increases the risk of being negatively affected by their faulty clients, especially since you share the same agency and registered office.
Example.
The banks will regularly review and block new applications if they are submitted using a registered office that has frequently been associated with problematic clients, such as those involved in anti-money laundering cases.
Tip 6: Knowing banking laws to prevent account closures
Explanation.
There are certain banking laws, such as the amount of money you can receive or transfer. These laws are not always communicated openings by banks or they are within a contract that you may have forgotten.
Reasons.
If you do not know these laws or forget them, you may risk your bank account being closed or receiving questions from your bank that need to be answered in order to use the bank account.
Example.
When you have B2C clients (e-commerce, online courses) that have a value between 0-100 dollars, you should not be done through invoice. Instead, you should use a payment gateway provider.
Also, watch this video on this matter:
Further Reading:
- A guide for the easiest way to open a business bank account in Hong Kong
- You are unsure whether you want to open a business bank account with traditional or digital bank? The read this article.
FAQ: Hong Kong open bank account service provider
1 – Who can help to open bank account service provider in Hong Kong?
First, you can do it yourself, but you may either need more time or make mistakes that prevents a business bank opening.
Second, there are many bank account service providers to choose from. We recommend asking a tax accountant in Hong Kong as they are familiar with laws and have a good network with bank tellars.
If you need our help, feel free to message or book a call.
2 – Is it hard to open a business bank account in Hong Kong?
No, nothing in life is hard if you either know the right people or know how to. Otherwise, it could be hard.
Read the above article to understand what documents you need and what questions the bank tellers may ask you during the business bank opening.
3 – Business bank account in Hong Kong closed? What now?
This can happen if the bank thinks there had been suspicious activities. We will soon publish a list of things to be aware of when banking in business context.
