HSBC Defends Itself After Shuttered Account Linked to Hong Kong Arrests

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(Bloomberg) -- HSBC Holdings Plc moved to defend itself after Hong Kong police announced arrests linked to an account the bank closed last month.

The bank took to Twitter and Facebook on Friday and also sent a memo to staff saying that the decision last month to shutter the protest-linked account was unrelated to the “current Hong Kong situation.”

“We never take decisions to close any account lightly,” Maggie Cheung, a bank spokeswoman, said in a follow up email. “Our decision is completely unrelated to the Hong Kong Police’s arrest of the four individuals on 19 December 2019. We closed the account in November 2019 following direct instruction from the customer.”

The account controversy resurfaced on Thursday, after police arrested four people for suspected money laundering linked to the pro-democracy protests and froze HK$70 million ($9 million) in funds related to the Spark Alliance, a group that helps protesters pay medical expenses and legal fee.

That turned up the heat on HSBC on social media Friday, with people supporting the protests saying the bank’s November decision led to the police’s action. Banks operating in the city often have been caught in the middle of the protests that have roiled the Asian financial hub over the past six months, with Chinese-owned banks frequent targets of vandalism.

The company account linked to the Spark Alliance was closed last month after HSBC spotted activity differing from its stated purpose. The bank returned more than HK$50 million in checks to people affiliated with Spark, a person familiar said earlier.

“Our decision is in accordance to international regulatory standards,” Cheung said. “Global regulators expect banks to perform due diligence reviews on customer accounts regularly.”

Banks are required to “effectively assess risk” regarding account activity, ensuring the consistency of their stated purpose and source of funding, the Hong Kong Monetary Authority said in a separate statement on Thursday night, citing global regulatory standards. Suspicious transactions have to reported to authorities immediately, the banking regulator added.

©2019 Bloomberg L.P.

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