Know Your Customer (KYC) refers to the procedures used to identify customers and verify the consistency of their activities. In Hong Kong, these checks are part of the company formation process and also play a central role in opening a bank account.
Merritt has been assisting entrepreneurs in Hong Kong since 1998 and applies these compliance procedures to verify the identity of the individuals involved in the companies it supports.
Why is the KYC policy important?
Identify customers
KYC makes it possible to verify the identity of the individuals and legal entities involved in a company and to obtain consistent information about their profiles.
Combat money laundering and fraud
These checks are part of measures to combat money laundering and tax fraud, by verifying that the planned activity and transactions are legal.
Meet banks' requirements
Banks also take KYC very seriously. They request supporting documents and may refuse to open an account if they have doubts about the customer's identity or the legality of the business activity.
Protect relationships with contacts
A properly documented file makes it easier to communicate with banks, authorities, and the company's various partners.
What items are actually requested?
Natural person
For a new individual client, Merritt notably requires a copy of the passport and proof of address dated within the last 3 months.
Legal entity
When a company is involved, identification notably covers its director as well as its beneficial owners.
Activity and feed
Banks may request additional information about the business's activities, customers, suppliers, and expected cash flows in order to understand how the company operates economically.
What are the consequences for setting up your company?
For a legal and properly documented activity, KYC is a compliance step to anticipate rather than an obstacle. A complete file helps establish a clearer relationship with banks and the relevant authorities.
However, the validation of a bank account remains a decision specific to each institution. Merritt can prepare and present the necessary materials but cannot guarantee that a bank will accept the application.
Compliance and privacy
KYC checks involve submitting information about individuals and the company. Collecting this information helps meet compliance obligations and secure the incorporation and bank account opening processes.
These procedures must be carried out alongside the confidential handling of information provided by clients.