Hong Kong banking system a political tool for China, critics say

Published (HKT): 2020.12.07 20:37

HSBC came under fire on Monday for its handling of the accounts of exiled former lawmaker Ted Hui and his family, with critics accusing the bank of kowtowing to Beijing.

The bank accounts of Hui and his family members were frozen over the weekend, and then briefly unfrozen, according to Hui. On Monday, HSBC suspended the accounts again at the request of the Hong Kong police.

“How can [Hong Kong] be an international financial center if the banks do as they are told?” economist Law Ka-chung said. He also questioned the basis for HSBC’s action on the account of Hui’s family: “If the bank can freeze the accounts of a person’s parents, then that is total communism.”

The HSBC move was made on political grounds instead of legal reasons, Law said, citing the fact that police initially only accused Hui of absconding. The incident would affect Hong Kong’s international reputation, he added.

An HSBC spokesperson said the bank could not comment on the accounts in question, and asked Apple Daily to direct its queries to law enforcement.

The Hong Kong Monetary Authority, the city’s de facto central bank, said that it would not talk about individual bank accounts. “The HKMA does not participate in criminal investigation, and the relevant laws do not grant the HKMA the power to freeze accounts or assets. Thus, the HKMA does not provide guidelines on the freezing of bank accounts,” a spokesperson said.

A top bank executive in charge of anti-money laundering efforts said on condition of anonymity that Hui’s case raised major questions about a bank’s decision-making process on freezing accounts.

Banks usually suspended an account after police obtained a court warrant or provided evidence of a crime, but they might also act preemptively to protect their reputation, the source said, adding that Hui’s accounts were likely frozen after police got in touch with the bank.

The incident would hurt Hong Kong’s standing as an international financial center, but the government would claim that “only politically exposed persons are affected,” the source said.

Another source, who worked in a bank’s compliance department, said it was unclear whether HSBC had acted on its own initiative. The bank might have been “overly cautious, or it wanted to win the trust of certain people.”

Banks usually would not take the “serious” step of freezing accounts unless there was sufficient and solid evidence, the industry insider added.

As a general rule, banks in Hong Kong are required to give 30 days’ notice before closing a client’s account. The bank should, without violating the law, also offer an explanation for closing the account.

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