Hong Kong needs centralised digital database to comply with KYC, says government

Hong Kong needs a centralised digital database to comply with the Know Your Client (KYC) standard as the city develops as a financial technology centre, according to the new financial services and treasury bureau chief, James Lau.

KYC refers to bank and anti-money laundering regulations and activities through the process of identifying and verifying the identity of clients.

By using KYC procedures with a financial institution, a customer’s information might be stored with a trusted unique database, enabling the sharing of information across financial institutions for more efficient services such as opening up of bank accounts or the purchase of financial derivatives, Lau said.

As the government plans to start replacing all Hong Kong smart identity cards with more secure ones starting from next year and through 2022, Hong Kong would also need to know how to proceed with KYC, he said.

Lau said storing Hong Kong residents’ data into a unique centralised database might also allow for cross-border sharing of information.

Singapore has launched a pilot scheme for financial services this year, based on a national personal data platform, containing government-collected personal data such as the national ID number and residential address. It involves financial services processes, from opening a bank account to making a payment to making an insurance claim.

India has established a unique identification scheme, termed Aadhaar, which uses biometrics such as fingerprint and iris recognition to identify its citizens for banking services and the delivery of government welfare services.

But the scheme has raised concerns about the privacy and security of individuals’ personal data.

Lau was appointed the secretary of financial services and the treasury on July 1.

In July 2004, Lau was seconded to the Hong Kong Mortgage Corporation as chief executive officer, until he retired in December 2012. He was appointed under secretary for financial services and the treasury in January 2014.