HSBC tightens rules on lease of safe deposit boxes in HK

HONG KONG • HSBC has introduced stricter rules for the use of safe deposit boxes in Hong Kong, which customers use to store valuables but which are at risk of being abused for money laundering and terrorism financing.

Safe deposit boxes offer clients who lease them the possibility of storing valuable items such jewellery or art in a private and highly secure place, for instance, a bank's vault.

"The nature of a safe deposit locker means it has the potential for misuse for criminal purposes," HSBC, Hong Kong's biggest bank, said in an e-mailed statement in yesterday.

"We have introduced several clauses to the conditions of lease for safe lockers to further strengthen our defences against financial crime and to enable us to cooperate with law enforcement agencies when required."

HSBC, which is also Europe's biggest bank by assets, did not elaborate on the changes that it was introducing or whether the new terms were being imposed elsewhere.

But it said the new, stricter rules would apply also to customers who started leasing the safe deposit boxes before Dec 18, 2014.

A report commissioned by the federal government of Switzerland highlighted in December how, in certain circumstances, safe deposit boxes can be vulnerable to financial crimes.

HSBC agreed in 2012 to pay US$1.92 billion (S$2.65 billion) in United States fines for failing to stop hundreds of millions of dollars in drug money from flowing through the bank in Mexico, and has promised to fix the problems.

The bank, which has also been caught up in a tax evasion scandal at its Swiss unit, has since been carrying out a thorough exercise to upgrade its compliance and risk globally. HSBC said it was reaching out to customers, asking them not to deposit any property of an illegal or offensive nature such as illegal drugs, weapons, stolen property or guns.

Holdings such as explosives were also not allowed.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 31, 2016, with the headline 'HSBC tightens rules on lease of safe deposit boxes in HK'. Print Edition | Subscribe