CONFIDENTIAL
5
their existing operations, Salomons having established a regional headquarters in Hong Kong (to the irritation of the MAS in Singapore).
10 In the buoyant domestic climate, local banks have been achieving good results and Nendick mentioned, in particular, an improved performance from Standard Chartered. On the regulatory side, Nicolle has already put in place a capital adequacy system which is close to the Basle pattern and he expects, later in the year, to align it completely with the Basle model, without difficulties. Hong Kong has a reputation as a place where drug money is laundered. The government feel that this may be unjustified but they have now put to Legco a Drugs Laundering Bill, modelled on the UK legislation, which places the onus on banks to report if they know or suspect that someone has a drugs connection. The banks have raised a number of objections to the Bill, firstly (and most validly in Nicolle's view) on the grounds that it is hard to expect counter staff who, because of the current labour shortage will, in many cases, be young, inexperienced and untrained, to identify easily the possibility of drugs laundering. The second point made is that Hong Kong is a society where cash is used much more freely than in the UK. The banks' own preference is for some sort of reporting requirement (thus putting the onus on the authorities) for deposits above a fixed (rather high) minimum amount. Nicolle argues that, while cash is widely used in Hong Kong, banks know the people who bring it in eg, stores, bookies etc. If someone unknown brings in off the street a large sum of money this is suspicious in itself. His view is that the Bill will be passed shortly without any substantial modification.
11
In the securities area, the Bill setting up the Securities and Futures Commission (SFC) is now through Legco having been very strongly argued but in what Robert Owen thought was a debate of a very good quality. The Bill is broadly in the form that Owen wanted it and his task is now to put it into effect. One issue which is currently exercising him is the possibility of Hong Kong companies which move their domicile off-shore to Bermuda or the Caymans, getting round Hong Kong's rules on the disclosure of interest in the absence of harmonisation of regulations with the authorities in the territories concerned, or some sort of agreement
No comments yet.
Private notes are available after approval.