Law and Code for Financial Inclusion in Hong Kong

Abstract

This article examines the problem of banks’ de-banking practices inside Hong Kong’s Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime, a problem that has created considerable tension between AML/CFT prevention and financial inclusion. It considers the impact of a multitude of financial reform causes, namely the promotion of financial technology innovation, the facilitation of regulatory technology development and, eventually, an increase in financial inclusion. Ultimately, it examines how financial market stability and integrity can be sustained through both a digital financial inclusion framework and a legal and regulatory framework that consists of AML/CFT safeguards and their variable approaches to address customer due diligence requirements, as well as financial consumer protection against digital financial and digital technology risks. Two legal theories, namely futurism and regulatory ritualism, will underpin the assessment of the effectiveness of the AML law and regulations, in view of the FinTech development and excessive suspicious transaction reports in Hong Kong. This article adds to the literatures of financial inclusion and AML/CFT, within the interdisciplinary dimensions of law, innovation, technology and entrepreneurship, as it aims to contribute to the regulatory policy formulation and the rule-making for financial law and regulation towards gradual opening of banking access to business enterprises.