In many ways, Hong Kong sets the gold standard for KYC regulations and the ease with which it enables companies to comply with them.
But even with its outstanding set of AML and onboarding rules, the code and its application isn’t without challenges – challenges that Know Your Customer’s automated solution is uniquely suited to overcome.
Hong Kong’s Anti-Money Laundering Ordinance (AML) is the city’s principle piece of legislation covering KYC and it’s as good as any in the world.
It’s risk-based, thorough and in some ways tougher than even regulations in Europe. For instance, while companies must carry out beneficial ownership due diligence verification on any individual that owns 25% or more of a target company, that drops to as low as 10% for banks onboarding higher-risk entities — among the strictest in the world.
The city also has a very common-sense approach to eliminating onerous paperwork and verification tasks.
Another for-instance: jurisdictions around the world require proof of address among many other documents in their onboarding procedures. This is often time-consuming as it means finding documents such a utility bills that very few people have easily at hand. Understanding that such requirements are often rendered useless by the ease with which they can be circumvented, Hong Kong’s regulator merely asks candidates for a contact address.
Importantly, Hong Kong is forward-looking too, eagerly grasping the advantages of technology where possible. This is clearly demonstrated in the way the regulator allows KYC targets to overcome one of its own potential compliance bottlenecks: a requirement that individuals undergoing onboarding verification must meet face-to-face with government overseers to open a compliance account.
Instead of enforcing a physical meeting, with all the cancellations and other snags that can potentially throw up, the regulator has facilitated video-conference meetings and even allows candidates to send in recorded video.
This attention to regulatory detail is perfect for Know Your Customer. We can tailor our automated compliance services to meet all of the Hong Kong regulator’s rules. But we can go further, and help our customers overcome the shortcomings that even Hong Kong has.
To give an example, let’s look at two things almost peculiar to Hong Kong.
Firstly, is the compliance process at local companies. It’s slow, very slow, on account of the fact that most compliance is handled manually. Labour is relatively cheap in Hong Kong and smaller businesses are happy to take on more staff or commit more working hours to complete compliance tasks. Manual compliance is bedevilled by high costs and the increased incidence of potentially costly errors. While a low-cost workforce can overcome the former, the latter remains a risk.
As well, manual compliance procedures are likely to run up against the second peculiar aspect of KYC in Hong Kong: imposed completion dates. The regulator, mindful of the time it can take to onboard a client or conclude AML clearance, is in the process of setting time limits on compliance. Soon, companies will run the risk of being penalised for not wrapping up their due diligence.
Automation of KYC in a platform such as ours enables companies to avoid both those pitfalls. The precision and scalability of our individual and corporate solutions eliminates the human error potential inherent in manual processes. And through time-saving facilities such as online verification, document scanning and even a link to send those all-important account-opening videos to the regulator, we can ensure compliance officers meet their deadlines.
Our global reach means we’ve been able to build into Know Your Customer’s app and desktop-based solution compliance strategies for multiple jurisdictions. It’s a smart technology that recognises and maps different regulatory requirements around the world. That makes the process of onboarding substantially more efficient because it means we can leverage common approaches and features in a single platform.
Our built-in tools that enable clients to comply with Hong Kong’s video verification rule is an excellent case in point: it’s a feature our clients can also harness to comply with similar stipulations in Germany. And it is to that jurisdiction that we next turn our attention.
Last updated on May 9th, 2023 at 09:59 pm