Do you run a company in Hong Kong and has a bank account? Do you have a bank account in Hong Kong or want to open one? It is very important to get acquainted with Hong Kong bank account rules. A lot of bank accounts are getting closed for non-compliance or being associated with illegal activities. This post is a complete guide on why bank accounts get terminated and what you should do about it.
Five reasons why your bank account was terminated
The Hong Kong administration has become extra vigilant about the people and businesses opening and running bank accounts in its jurisdiction. Many are seeing their accounts getting terminated with or even without prior notice. Here are the main reasons for it:
- The bank holder’s residence or country of origin: If you are seen as a nationality or resident in a country considered high risk, the bank account will be terminated. The account could also be terminated if the country of origin has very high levels of taxes or tax-related legislations are changed.
- Getting involved in high-risk activities: Hong Kong banks account termination will be effected immediately if you are found to have engaged in high-risk activities. These are things such as pornography, art dealing, drug business, defense materials, and online gaming.
- Absence of transactions: When an account becomes dormant for a long time, it is considered an entity for holding private funds. You should, therefore, ensure to do some transactions from time to time.
- Location of the business clients: if some of your clients are located in high-risk states such as North Korea, Somalia, DRC, and Syria among others, your bank account could get terminated.
- Transactions not in line with the company plan: When the selected bank asked you to provide a business registration certificate and structure, the target was to monitor operations over time. Therefore, if the business starts operating outside the allowed activities, the bank account will get terminated.
- Failing to answer inquiries: Most banks keep making inquiries especially when suspicious activities are noted. If you fail to reply to these inquiries, Hong-Kong bank account termination will be effected.
What you should do after account termination
When the process of Hong-Kong bank account termination is initiated, the holder gets himself in a very precarious situation. This could even result in loss of funds.
- A period of 30-60 days is provided for the holder to get a new bank for the funds to be channeled to.
- The account can be frozen.
- A cheque can be drawn to the beneficiary of the account
Therefore, what should you do after a bank account is terminated? You should look for an appropriate corporate services provider with the expertise to jumpstart the bank account. Most of these services have been in Hong Kong for long and understand why banks close offshore accounts.
When picking such corporate services agencies, it is important to look at their history and the rate of success in helping clients get new bank accounts. They will help you shed off or stay away from the causative activities/entities that made the bank account terminated. Remember that it is crucial to act promptly to avoid things falling from bad to worse especially if it is a corporate bank account.