arthur yuen : bank account opening and maintenance opening remarks by mr arthur yuen, deputy chief executive of the hong kong monetary authority, at the briefing cum networking session on " bank account opening and maintenance ", hong kong, 21 april 2017. * * * good afternoon, ladies and gentlemen, 1. a very warm welcome to all of you to this briefing and networking session. we are going to discuss the important issue of business account opening and maintenance, and this event is jointly organised by the hkma and invest hong kong. i would like to first of all welcome all the representatives of chambers of commerce, who share the same concern as the hkma that some smes and start - up companies from overseas are finding it difficult to open bank accounts in hong kong. 2. i am sure you would all appreciate that over the past years, customer due diligence ( cdd ) requirements have tightened globally, and hong kong followed this international trend. needless to mention is also that a very small number of banks, for a variety of reasons, need to comply with requirements or standards mandated by their head offices or overseas authorities, thus leading to de - risking efforts in some instances. surely no one would disagree that we are now in a more complex world, and sometimes we indeed have to deal with sub - optimal outcome. but i totally appreciate that knowing it is one thing, and experiencing the effect of it is quite another. 3. to address this concern of the business community, the hkma has been working very hard with banks and various stakeholders in tackling the issue. our aim is to maintain a robust aml regime in hong kong while the system does not undermine access by legitimate businesses and ordinary citizens to basic banking services. so we require banks to apply a risk - based approach to the cdd process, and also emphasize the importance of banks ’ engagement with customers to ensure that they are treated fairly. since our sharing session last summer and the further guidance we provided to banks last september, it is now time to take stock of the latest developments. i will leave it to the banks to talk more about the improvement measures that they have pursued or are pursuing. they would also discuss the various practical aspects relating to account opening and account maintenance at the panel discussion later on. 4. while full efforts are being made to improve the situation, there is also feedback that some foreign companies are under the perception that hong kong is not a welcoming place for business, and have therefore turned to banks in

status as a nexus between mainland china and the rest of the world means that hong kong will play an increasing role in providing risk management solutions for international investors going into china and, increasingly, chinese investors going global, just like how we successfully facilitate those investments through our connect schemes. our commitment to further developing the derivatives market is strong and we stand ready to work with various partners on this. one key current issue is benchmark reform. as discussed over the past two days, many economies in asia have been working on this, as this reform is important not only to derivative markets, but also to bank lending. the hkma has actively engaged our banks to identify their exposures to the benchmark rates of relevance ( i. e., libor and hibor ) and to prepare for various scenarios that could play out during this process. at the same time, the treasury markets association in hong kong has proposed honia as an alternative risk free overnight reference rate to hibor and is consulting industry stakeholders. i should take this opportunity to mention that isda ’ s leadership on two important implementation issues – namely, how to adjust new overnight reference rates for longer tenors and how to ensure credit risk premiums are reflected – helped pave the way for constructive discussions in hong kong. so overall, progress is being made. managing the risks in financial market development whether it ’ s facilitating fintech innovations or deepening derivatives markets, it ’ s critical that a robust and adaptive regulatory framework and effective international coordination are in place to mitigate potential financial stability risks. the types of regulatory framework would depend on the stage of development in the market itself. for markets that are going through innovation, particularly those that are adopting new technologies, regulations should focus on “ nurturing ” rather than “ restraining ”. as an example, the hkma and our peer authorities in the region have adopted fintech sandbox 3 / 4 bis central bankers'speeches regimes, which are effectively testing grounds with a well - defined scope and a clear timeline. the authorities do not generally stipulate an exhaustive list of regulatory requirements in these sandboxes ; rather, the products are to be developed flexibly, and requirements would be evaluated during the process. coordination among regulators has also already begun as the global financial innovation network ( gfin ) is now inviting applications for cross - border testing of financial innovations. that said, while providing a conducive environment to support innovation, central banks and regulators would have to strike a good balance