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The Banking System of Hong Kong

The Banking System of Hong KongEvery bank in Hong Kong is subject to the Banking Act, which came into force in 1986. The law is repeatedly reworking by the authorities with the aim to improve some of its provisions and to bring it in line with current market conditions.

Under this law, all banks in Hong Kong have combined in a system with a three-tier structure. Accordingly, each bank Hong Kong refers to one of these three groups:

  • Licensed financial institutions that do not have restrictions on the size and longevity offered by savings and current accounts and deposits received
  • Hong Kong banks with a limited license, the max amount of deposits which is 500,000 HKD
  • Organisations which are accepting deposits amounted to 100,000 HKD and more for not less than three months deposit-taking companies.

Deposit-taking companies and banks with a limited license in Hong Kong are two types of financial institutions with the same function. These structures were created by foreign financial companies without a full banking license, to be able to open their representative offices and conduct business in Hong Kong.

Managing accounts

Banks in Hong Kong actively use phone and online banking. Different banks have different methods of protection, among them are the following:

  • Protection dongle device that generates at regular intervals electronic key – combination of digits that must be entered to log in to the online banking system or for perform a transaction
  • Password protection
  • Protection using the codeword
  • Protection of an authorised signature

Providing documentation to the banks of Hong Kong Exchange and Control

As a rule, for ordinary transactions of receiving and sending payments, banks in Hong Kong do not require documentary evidence of the transaction.

In rare cases, the bank may request additional information on transactions, to confirm that the transaction is not related to money laundering or terrorist activity.