Bank Crackdown Continues: HSBC Checking Up on Chinese Suppliers

Michael MicheliniBanking, Blog, Corporate4 Comments

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This is the latest in the banking tightening – Chinese suppliers seem to be getting more scrutiny from banks, specifically HSBC HK.

Over the past few months, we have been covering what has been happening in the banking sector. More and more scandals of people using their business bank accounts to do drug dealing, money laundering, and acts of terrorism have uprooted the market.. Often this is pointing to Hong Kong based banks – as it is an amazing financial center of the world and international friendly.

But, as these evil people used these banks to do bad things – now the bank is under pressure from regulators to KYC (Know Your Customer) even more.

And now this has overflowed into current clients. Today we’ll discuss Chinese factories and suppliers.

The Email My Friend Received From His Chinese Supplier

So just yesterday (June 2016) he received this from his Chinese sale rep at the factory (I cleaned up the Chinglish):

Dear buyer,

We have one thing here that we need your help on. We use our company name to receive your payment.

Now HSBC checking into this transaction and others. So we need a Chinese contract to show to HSBC that is business not illegal payment.

It will be helpful that you sign and make stamp the attached contract for us. Please don’t write date on it. This contract we need to show we signed it on the 1st day of March 2015.

Thank you very much.

Chinese Factory Sales Representative

The original Chinglish letter I received had (Insert Company name here). Seems like Lemon didn’t change the email for each of her clients and copy pasted them. I wonder how many of these emails she has been sending to her previous customers.

And this is an order from March 2015 – over a year ago! How far back is she going, and will she get all these previous clients to comply and respond?

Can only imagine the stress they are going through. They must have gotten a letter from HSBC that their account is under review. They have 2 months to provide documents on their business transactions. A few clients of ours as well as friends and readers of the blog have told us about these scary letters they have received from HSBC HK asking them to verify their account.

What’s the Takeaway? Keep Records

HSCB checking chinese suppliers

What can we learn from today’s notice – keep proper documents, invoices, contracts with your business. Years down the road, you can get an email, letter, or inquiry from a bank, a tax department, or potential business partner. Keeping all this together and ready to show when needed will help you sleep better at night.

I also think you need to take good care of your bank account. Keep things simple and now more than ever, focus on using it for proper business transactions.

Future Of Banking – Stricter?

What is the future of banking – I think it will continue to get stricter and stricter. Which goes against easy, international business from your laptop. But the reality is, bad eggs came in and did bad things and now ruined it for all.

I see the future getting to the point where we want to make a bank transfer, we will have to prove what the transfer is for, maybe even upload an invoice to show. But how will a bank still even know this is real or for what it says it is? Will the bank have to contact the other party? Will they have to check the pricing of the product to the market standards?

Seems the regulators are putting all this pressure to the bank’s side. Which is smart – the regulators can outsource this KYC and verification process to the banks.

But then the banks will increase their fees. Or they will only do business with high net worth clients – as this is a lot of hassle. This is already happening! We see startups and entrepreneurs getting declined and it is heart breaking.

This is something we are following closely here at Global From Asia and look forward to keeping you updated as soon as we can.

Best of luck on your international business expansion! Please share your insights and stories in the comments below!

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4 Comments on “Bank Crackdown Continues: HSBC Checking Up on Chinese Suppliers”

  1. Fraser Bewick

    Good advice. Glad I got the account set up early. it is a bit silly to hamstring start-ups like this.

      1. Fraser Bewick

        Indeed. Hopefully they are happy with the charges they are receiving. Small fish, or not. 🙂

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