Banking Law and Practice

CHAPTER 2

Opening and Conduct of Accounts

Learning objectives

After studying this chapter, you should be able to:

1 Describe certain legal issues commonly affecting the operation of different bank accounts

2 Outline procedures for opening of accounts for different types of clients as well as executing proper mandates for each

3 Determine the circumstances where the relationship between banker and customer may be terminated

4 Be alert to the different forms of money laundering activities and what to do to counteract such activities

Introduction

This chapter will discuss the opening and conduct of accounts as well as the different kinds of customers one encounters in a bank in Hong Kong. Contractual documents and mandates are daily features of banking procedures when opening a new account. As the world is turning more global and Hong Kong is an international financial hub, bank employees should be aware of the proper banking procedures as well as the dangers of money laundering and terrorist financing.

Opening of an Account

While all banks are anxious to increase their business, in particular deposit bases, it is necessary to exercise caution before opening an account and affording any banking facilities. No prudent banker would open an account immediately on the mere request of a stranger and/or without knowledge of the new customer, as there would be many risks in conducting an account for a rogue.

In the case of a deposit account, the bank may only require basic information from ...