A Hong Kong-based digital banking startup has closed an unspecified number of business customer accounts following a compliance check by Standard Chartered bank.
Startup Neat confirmed with HKFP that Standard Chartered had suspended the affected accounts on February 1 and did so without giving detailed reasons. Neat did not reveal how many of its users were affected but said that “for our most active customers it is business as usual.”
A Standard Chartered spokesperson said the bank does not comment on client information.
On its website, Neat describes its online services as an alternative to traditional banking. Its “Neat Business” service lets companies register for a Hong Kong bank account without needing to go to a physical branch, even if the company is based overseas.
Local businesses and startups often complain about the difficulties of opening bank accounts in the city.
Last August, Standard Chartered was one of the 29 companies which applied for a virtual banking licence issued by the Hong Kong Monetary Authority. The licence will allow its holder to operate like a bank without needing to maintain physical branches.
Neat said it notified customers of the suspension on the same day it was told by Standard Chartered: “Despite Neat having best-in-class KYC [know-your-customer] and AML [anti-money-laundering] procedures, Standard Chartered Bank cited a compliance review without detailing reasons for individual account suspensions,” said Neat representative Iris ten Teije.
Neat told HKFP that it will switch to a new system by March and will restore full functionality to affected Neat Business Accounts – but it did not say whether it will remain with Standard Chartered. The startup also waived card subscription fees for affected customers in the meantime.
Gregor Vand, a director at a London-based software company and a Neat customer, said the account suspension for his company was “a little bit abrupt.”
“It was like, ‘You will no longer be able to receive payments in ten days,'” Vand told HKFP. “That was a big problem because we just signed a new client, and we were expecting to receive quite a large deposit from them.”
He added that Neat did not explain why his company was targeted: “I think the problem is, if they [Neat] don’t know themselves when a company is going to be struck off, then that’s quite a big problem because there’s no line of communication [from Neat clients] to who you think your bank is.”
Vand said he appreciated that Neat was trying to push the boundaries for banking in Hong Kong, but the incident affected his company’s credibility towards its client.
Meanwhile, his company – which had opened its Hong Kong office recently – would fall back to another account with a traditional bank.