Joshua Wong wasn’t mistreated by HSBC
A cautious bank is just doing its job in an industry that has been fined more than US$8 billion in recent years for lax anti-money laundering control
“Hong Kong activist Joshua Wong accuses HSBC of political censorship for rejecting bank account bids”
South China Morning Post
Commercial bankers don’t normally call up a columnist to volunteer stories. Three did this week for this single headline. None were from HSBC.
“Don’t bring in political censorship. You don’t really need that to veto his application,” said one.
Under the current anti-money laundering regime that has been increasingly suffocating ever since 911, the failure is not at all surprising.
There are three red flags.
First, Wong may be listed as a politically exposed person (PEP) - a term that means high risk; extra work and hefty penalty if not handled well by bankers.
The text book definition of a PEP is an individual who is or has been entrusted with a prominent public function that can be abused for the purpose of money laundering; bribery and terrorist financing.
It is not just about the crimes but also the media scrutiny attracted by a PEP that will subject a bank to higher reputational risk.
These include heads of state, senior politicians, high ranking government officials, judicial or military officials; senior management of a state-owned corporation; an important political party official as well as their family members and friends.
If the PEP list reads very clearly and Wong does not appear to fit; consider one more fact.
Reuters Thompson has made a good business by providing “intelligence profiles of heightened risk individuals and entities globally”. The real list is far more extensive.
Any bank account application from a PEP would be subject to extensive investigation on her background and sources of wealth.
For example, a successful business woman in Taiwan is classified as PEP for her father’s friendship with a Thai junta though her old man died when she was three years old.
Questions for her are: Did you get a single dime from your old man’s estate? Any diamonds? Any antiques? Who are your brothers and sisters? Where are they? How often do you contact them?
PEP or not, the questions on Wong asked by the bank are pretty standard for a university student with no income.
Who are your parents? What jobs are they doing? How much do they earn? He rebuked them all due to privacy.
PEP can only get an account with senior management approval. If successful, what follows is the so-called “enhanced ongoing monitoring”.
Say, getting an identity and address proof every three months? Or doing a periodical review of the transactions in the accounts to make sure there is nothing fishy?
If it costs HK$100 to monitoring the account of an ordinary people, it is HK$1,000 for a PEP and HK$10,000 for a high risk target.
“It is troublesome and expensive,” said another banker. “We will do it only if it generates big bucks.”
Yet, donation is what Wong is trying to collect via the account. To bankers, that means not only bad business but more importantly big risk.
Charities and non-government bodies have long been the target of anti-money laundering rules.
To justify putting HK$100 million into a jeweller’s account, you need a diamond. To justify that for a charity, all you need is “love”.
The moment the cash gets into the charity’s account, it is cleaned. There are then dozens of ways to get it out.
How about building a school for the poor by a designated construction team at a budget five times market price?
Both local and international NGOs now operate under a long list of dos and don’ts as advised by their home authorities.
They opened accounts under their institution’s name to satisfy banks with good governance. Even so, they face increasing difficulties to get it done nowadays.
Wong and his comrade Agnes Chow were, however, applying in their personal names, instead of their yet to be established political party.
That is the third red flag. What bankers are to rely on to satisfy themselves that there is a system to know the donors and money going in and out of the account?
Some may ask for good faith in the young activists. Yet, when the banking industry has been fined more than US$8 billion in recent years for lax anti-money laundering control, discretion is rare.
The charismatic young activist may have made good headlines.
The reality is however grand his political vision, Wong is only sharing of the pain of many in getting access to banking services nowadays. Nothing more and nothing less.