Global Banks Screening Clients for Ties to Hong Kong Pro-Democracy Movement

Wealth managers at global banks, including Britain’s HSBC, are reportedly scrutinizing whether their clients have ties to Hong Kong’s pro-democracy movement in an effort to avoid tangling with China’s controversial new national security law. The Credit Suisse Group AG, HSBC Holdings Plc, Julius Baer Gruppe AG, and UBS Group AG are probing to determine whether clients fit the designation …

Wealth managers at global banks, including Britain’s HSBC, are reportedly scrutinizing whether their clients have ties to Hong Kong’s pro-democracy movement in an effort to avoid tangling with China’s controversial new national security law.

The Credit Suisse Group AG, HSBC Holdings Plc, Julius Baer Gruppe AG, and UBS Group AG are probing to determine whether clients fit the designation of politically exposed persons, Reuters reported. The designation, which is usually applied to politicians and government officials, can hamper or halt clients’ ability to access banking services. Bankers have scrutinized clients more intensely for political and government ties in China and Hong Kong and subjected them to more diligence requirements, a process that reportedly involves going through clients’ public comments as well as their recent social media posts.

China approved the new national security laws in May. Pro-Democracy activists and other critics say the laws would effectively end the “one country, two systems” policy that has allowed Hong Kong its political freedoms and civil liberties despite still being technically governed by China.

China claims that the laws, which were implemented earlier this month, are necessary to crack down on separatism, subversion, terrorism, and foreign intervention in Hong Kong in the wake of the pro-democracy protests against Beijing. The measure would also allow China’s state security agencies to operate in the territory.

Last month, HSBC signaled its support for Beijing’s national security law, the chief executive for the global bank’s Asia-Pacific region signing a petition in favor of the law.

“HSBC respects and supports any laws that stabilize the social order in Hong Kong and revitalize economic prosperity and development in Hong Kong,” HSBC said in a statement.

Meanwhile, British Prime Minister Boris Johnson said in June before the law took effect that the United Kingdom would offer refuge and a path to citizenship to nearly three million Hong Kong citizens should the law be enforced. Johnson said the laws violate the terms of the Sino-British Joint Declaration, the agreement the U.K. reached with China after Hong Kong returned to Chinese sovereignty in 1997.

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