On 12 Jun 2025, the HKMA clarified promotion and sale arrangements under the Southbound Scheme, permitting Mainland partner banks to facilitate three-party dialogues for product introductions by Hong Kong banks on Mainland soil subject to local regulatory compliance. The clarification mandates Hong Kong banks to adhere to Hong Kong's suitability obligations and regulatory requirements, with explicit delineation of responsibilities in cooperation agreements to prevent any implication of the Mainland bank acting as the Hong Kong bank's agent.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Clarification on Southbound Scheme Promotion and Sale Arrangements
On 12 Jun 2025, the Hong Kong Monetary Authority (HKMA) issued a circular clarifying promotion and sale arrangements under the Southbound Scheme of the Cross-boundary Wealth Management Connect Pilot Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area, updating the Implementation Arrangements issued on 24 January 2024. The clarification specifies that Mainland partner banks may facilitate three-party dialogues (online, teleconference, or video conference) between Southbound Scheme customers and Hong Kong banks on Mainland soil, subject to Mainland regulatory compliance, with Hong Kong banks permitted to introduce eligible wealth management products during such dialogues.
Key Compliance Requirements for Hong Kong Banks
Hong Kong banks must comply with Hong Kong's laws, regulations, and regulatory regime for transactions conducted via dedicated investment accounts, including suitability obligations when making solicitation or recommendations. Cooperation agreements with Mainland partner banks must explicitly define each party's responsibilities and obligations, and must not imply that the Mainland partner bank acts as the agent or representative of the Hong Kong bank on the Mainland. The clarification references Paragraph 9.4(b) of Annex 1 to the Implementation Arrangements and related guidance regarding audio/video recording requirements.
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