How to manage your Hong Kong Business Account properly? | Article – HSBC VisionGo

What are the things to bear in mind in day-to-day bank account management, and how businesses should respond to banks’ requests for information?
Finance  ·    ·  4 mins read

Many companies expanding its business to Hong Kong or those with cross-border businesses choose to open a business account with banks in Hong Kong. Some of the advantages include convenient settlement of international trade payment, access to freely convertible currencies and the free flow of capital. In recent years, as internet banking becomes more sophisticated, it is also much easier for business banking customers to operate their accounts online. 

Meanwhile, banks in Hong Kong have also been strengthening their risk control. With increasingly stringent control measures, banks may approach companies to find out more when suspicious activities are detected in their accounts. 

In fact, the reason why banks need to understand the genuine identity of their customers (“Know Your Customer”, or “KYC”) and exercise risk control on their account activities is to serve customers better and protect them from fraud and financial crime.

To help companies manage their Hong Kong bank accounts properly so as to avoid disruptions to their normal account activities and therefore impact on their business, this article focuses on things to bear in mind in day-to-day bank account management, and how businesses should respond to banks’ requests for information.

How should bank accounts be managed on a day-to-day basis

To ensure your business account is duly managed and used, you may want to pay attention to the following in your day-to-day operations: 

First, use your account for legitimate purposes. Different types of bank accounts are designed for different purposes: a personal account should only be used for personal financial management and transactions, while a business account should only be used for business purposes.

Second, avoid transactions that are not aligned with the nature of your business to prevent fraudulent transactions and to protect the account from being used by criminals for money laundering.

  • Check the activities of your bank account regularly, and reconcile all the transactions on your bank statements.
  • Ensure domestic and international payments are transferred, received and spent as intended and properly recorded.
  • Keep proper records of income, transfers and expenditure, and retain the related receipts, invoices and supporting documents.

Other than that, when changes to business cycle or organisational structure happen in your company, proactively inform the bank and update your information as soon as possible. That includes expansion into new markets, changes in business nature, and people changes concerning, for example, directors and authorised signatories. Staying in touch with your bank helps safeguard your business from financial crime, and therefore helps you avoid missing the right market opportunities.

Third, before negotiating for business or handling transactions, carry out a thorough research of the target market and business partners to avoid fraud and other financial crime risks. 

  • Identify whether the target market is named on any sanctions list. Please refer to HSBC’s Sanctions Policy Statement for more information.
  • Pay attention to the source of funds, and ensure the legitimacy of funds from new investors or partners.
  • Know who you are selling to or buying from, including having clear payee and payer information.
  • Choose your payment method carefully, including payment agents and platforms. Never transact via unlicensed remittance agents. 

Fourth, understand and fulfil your tax obligations, conduct audit and tax filing in compliance with laws and regulations, and maintain a clear record of tax documentation.

Fifth, pay attention to security measures in transactions. Never make payment for others, and never use your business account to handle assets not related to your business. 

  • Use tiered authority and signature levels for payments, and set different transaction limits accordingly. Do not let unauthorised persons operate your account. In addition, set your daily online transaction limit properly according to your business needs. 
  • Provide your employees with training in fraud and financial crime prevention, and remind them to verify the identity of the counterpart through email or phone call before making a payment.

What should I do if I receive a request for information from the bank? 

In general, stay alert to letters, emails and phone calls from your bank in order to avoid missing important information and notifications. When the bank requests for information, you should respond as soon as possible, and provide the latest and most comprehensive information accordingly.

For example, when large wire transfers or cash deposits that do not appear to be consistent with a company’s existing business profile occur, banks may look to the company for the related invoices, agreements and supporting documents that can be referenced to verify the transactions. Staying connected with your bank in a timely manner and providing it with your company’s latest developments and up-to-date information, such as expansion from domestic to international business, will help the bank understand such transactions.

However, if a company fails to provide a reasonable explanation for any unusual activities in their account, the bank may have to temporarily delay or restrict certain banking services, such as outward remittances. Therefore, it is very important to have a habit of keeping incoming funds, transfer and payment records, as well as retaining the corresponding receipts, invoices and supporting documents.

If you have any questions about updating your business or personal information with the bank, don’t hesitate – take the initiative to ask the bank.

In addition, companies should also take accounting and auditing seriously. Audit reports are issued by third-party Hong Kong Certified Public Accountants, after having audited the company’s account. An audit report helps the bank better understand the status of a company’s business and its account activities. Activities such as director’s remuneration, dividends payment or shares trading should all be clearly recorded in the company’s annual financial statement. Receipts and other supporting documents should also be retained.

A number of banks have already rolled out online audit confirmation to help audit firms complete auditing securely and efficiently. For example, HSBC partners with the world-leading auditing validation platform Companies may authorise audit firms to apply for confirmation letters online through the platform. From the company’s perspective, the auditing standard is more transparent and detailed, and the process and operation of electronic authorisation are also simpler and clearer.

SMEs are the backbone of Hong Kong’s economic development. To protect your bank account from fraud and financial crime and to support your prosperous business growth, it is advisable to make an effort in the day-to-day management of your account. Cooperating with the bank to provide relevant information will help avoid disruptions to normal activities in your account, and therefore help avoid missing business opportunities.