The number of small and medium-sized foreign trade enterprises increases sharply. For foreign trade enterprises, the best way to receive cross-border payment is to set up offshore account. Offshore account can only be opened in the name of offshore company. Hong Kong is the most effective springboard to enter international market. Besides, since Hong Kong is not controlled by the Foreign Exchange Bureau, foreign currencies can move into and out of Hong Kong freely. A number of small and medium-sized foreign trade enterprises choose to incorporate an offshore company and to an open offshore account in Hong Kong.
Recently, a number of insiders in the banking industry reveal that a great number of offshore accounts home and abroad have been investigated, closed, frozen and downgraded. There are mainly two kinds of banks which provide offshore account opening services at home. The first kind is foreign-funded banks, such as HSBC, SCB and ABN. The other kind is Chinese-funded banks, such as Shenzhen Development Bank, Guangdong Development Bank, China Merchants Bank and Shanghai Pudong Development Bank. Besides, banks in Hong Kong which can set up offshore accounts include HSBC Hong Kong, Hang Seng Bank and BOC Hong Kong.
There is more and more news about the closing of offshore accounts owned by small and medium-sized foreign trade enterprises in Hong Kong. Now, several banks in Hong Kong are closing offshore accounts in Hong Kong. The country encourages normal trade and transaction. The control over offshore accounts becomes increasingly strict. All such policies, like CRS exchange of information on financial accounts, aim to prevent capital flight and money laundering as well as tax avoidance of offshore accounts.
Offshore accounts are closed for many reasons, most of which are related to compliance and risk control. Especially, the accounts of middle and small-sized enterprises often receive a great number of payments in small amount, which results in banks’ tremendous pressure of anti-money laundering investigation and the sharp increase of risk.
Throughout the history, cases of imposing fines on banks home and abroad can be found everywhere. In February 2019, Paris Tribunal Correctionnel found Union Bank of Switzerland Group AG (UBS) guilty of illegally soliciting clients and laundering the proceeds of tax evasion, ordering it to pay 3.7 billion EUR in penalties and pay 800 million EUR of tax loss and interest to the French government. According to JRJ.com, on January 24, 2019, CBRC Jinhua Branch imposed fines on two banks, namely 6.10 million Yuan on Zhejiang Chouzhou Commercial Bank and 700,000 Yuan on China Construction Bank Jinhua Branch.
Courtesy of amz123.com