The global campaign to combat money laundering and prevent tax avoidance is in full swing. CRS makes every high net worth individual feel insecure.
At the end of last year, the first external exchange of tax-related information of financial accounts owned by non-residents was conducted among mainland China, Hong Kong and Macao. Meanwhile, financial supervisory authorities strengthened the efforts to combat money laundering. As a response, all major banks began to conduct due diligence one after another, raise the threshold to open offshore accounts, and freeze a great number of offshore accounts with suspicious acts.
At present, it is hard to open an offshore account in Hong Kong. Any improper operation may result in the closing and cancellation of account at any time. So, what behaviors may result in the cancellation of account? How to avoid the cancellation of a bank account in Hong Kong? These are some important questions that raise concerns of many customers and friends. Today, I will share relevant contents with you.
Two types of risk behaviors
Generally, banks cancel accounts for two reasons:
The account has not been used for a long term.
The bank suspects that the account is used to launder money.
If the customer asks the bank about the reason why his/her account is canceled, the bank will only answer that the account is canceled for administrative reasons. By then, the custom has to either transfer the money out in advance or get a promissory note/cheque over the counter when the bank closes the account. (This promissory note/cheque is valid for half a year. If the bank cancels an account and cannot get in touch with relevant client, things will be quite complicated after half a year.)
As to the question “how long will an account be frozen and canceled since it becomes inactive”, different banks give different questions and have no clear guidance. Based on experiences, it is secure to activate the account in every 3 months.
Two kinds of behaviors are “fatal problems” that make the bank suspect of money laundering.
A large amount of cash is deposited into the account, especially US dollars. If a customer deposits a couple hundred thousand dollars in cash into his/her account once, no one will be surprised when such account is closed in the next day.
Money is remitted to an account from a number of accounts and then transferred out in entirety after a while. If the money is problematic, the account which such money is remitted to is problematic.