Andrew Henderson

Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

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Hong Kong Banks don’t want your money

Dateline: Hong Kong I must have passed by a hundred beautiful women on the streets of Hong Kong today. You could throw a stone and hit a dozen Hong Kong banks at any point on streets like Des Voeux and Queen’s Road in the Central district. And on a Thursday morning, it’s also teeming with some really stunning women. Even though I have a penchant for smart, successful Asian women, I couldn’t muster up the courage to talk to any of them today. One after another, they passed me by as an odd feeling of depression sunk further into me. I was carrying something which had sunk my confidence rather low and impeded my ability to be my normal jovial self. That something was my United States passport. I had set up a number of meetings with Hong Kong bankers today. As the freest economy in the world, Hong Kong would seem a great place to bank alongside Singapore. And while that’s true, navigating the banking system here – especially if it’s overseas banking – is rather tricky. That US passport I carried in my pocket was my ticket to a number of rejections from Hong Kong bankers who politely – and in one case not so politely – informed me that our meeting need not last long because they have no need for outside money. There are enough Hong Kong residents with huge sums to deposit, as well as hordes of mainlanders doing whatever necessary to get their money into the greater economic freedom of Hong Kong. Make no mistake – it’s still possible to open a bank account in Hong Kong, albeit it at only a very few banks. Even the dreaded HSBC is closed to new business on the corporate side, although they will gladly disservice you on the personal side. There are a few other multinational banks that you’ve heard of that will open an account for you, although some have odd conditions or stricter requirements than others, which makes it tricky. But it can be done. There are countless local banks, however, who have no need to subject themselves to the amount of pain the US government would inflict on them for taking US customers, or other foreign customers. After all, some of these local banks are really family affairs. They were started by an ancestor some time ago, and are still privately owned. As such, these local Hong Kong banks run conservative operations. They aren’t lending obscene amounts of money to anyone with a pulse. There are no such things as NINJA loans for real estate or anything else here. They are tightly run and don’t take part in the casino-like bets big American and western banks got themselves into trouble with. Because their balance sheets are much better, these local banks aren’t trying to attract every Tom, Dick, and Harry. I doubt anyone in Hong Kong has ever gotten junk mail promising them a free toaster or tickets to the zoo for opening a bank account here. Many of the Hong Kong banks I met with have a requirement that new non-resident customers are introduced by an existing Hong Kong banking customer. While that requirement could be as easily met as having your lawyer or your auditor refer you, these banks want to keep these intimate and would almost prefer you get referred by your wife’s best friend rather than some sidestepping business connection. As the United States continues FATCA and the developed world continues with CRS information sharing, I imagine more places like Hong Kong will simply throw their hands up and insist on local and well-known depositors. It’s just not worth it for them to contend with endless paperwork from overseas governments. And that doesn’t just apply to offshore banking, but for other investment opportunities as well. If you were to come to Hong Kong thirty years ago, you would have had these banks at “Hello”. Now, Hong Kong and plenty of other places have found enough local wealth to keep well-run operations afloat. They don’t want to be some international megabank that has to rely on corporate welfare to stay in business. And that means fewer opportunities for you. The fact that so many Hong Kong banks are only willing to open accounts for local residents shows just why you not only need an offshore bank account, but also a second residence in another country. Even if it’s only on paper, it’s important that you have another place to call home. As banks and other institutions tighten up their standards, Americans will be the hardest hit thanks to Uncle Sam’s arrogant, menacing laws like FATCA. Why should some Hong Kong bank awash in Chinese money go out of its way to comply with an angry edict from the IRS when it has more money than it can loan out now? Sadly, obtaining an HKID – the local residence card – in order to bank here now requires you to start a business and pay taxes with no offshore exemptions. The real estate residence option closed some time ago. There are still a couple of good banks open to foreigners, and if you know what you’re doing, opening an account can be done, but it is no longer “easy” in any sense of the word whatsoever.

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