Hong Kong’s banking regulator is weighing how lenders and their customers should share the burden of losses from rising scam cases, as fraud-related crime continues to surge in the city.
The Hong Kong Monetary Authority (HKMA) has put forward a revised “responsibility framework” for consultation with retail banks, aimed at clarifying how claims should be handled when victims are tricked into authorising payments to fraudsters. The framework is distinct from cases where criminals seize control of accounts themselves, claims South China Morning Post.
Arthur Yuen Kwok-hang, the HKMA’s deputy chief executive, told the Hong Kong Institute of Bankers’ annual conference that customers have a role in protecting themselves from scams, but banks must also have effective safeguards in place. “It would be unrealistic and really unfair to expect banks to be able to prevent every scam transaction right away,” he said. “But at the same time, we should emphasise that banks should have effective measures in place to support customers in doing that.”
He added that factors such as a customer’s age should be considered when deciding who bears responsibility. “We are not saying that in every case the bank must pay or the customer must pay,” Yuen said. “In the next few months we will, in the consultation period, work very closely with the industry to finalise the package.”
Yuen explained that banks could be held responsible if their monitoring systems flagged a potential scam but failed to alert the customer. However, if banks took appropriate action and the customer still went ahead with the transfer, responsibility would fall on the individual.
The consultation does not yet have a set timeline for completion, and no date has been given for when the framework will take effect.
Scam cases in Hong Kong have hit record levels. Police data showed 44,480 fraud-related crimes last year, and in the first half of this year alone, 20,764 cases were logged—nearly half of all recorded crime, representing a 4.3% increase year-on-year. Total losses stood at HK$3.54bn (US$455m). “It’s a lot of money,” Yuen said.
A survey by City University of Hong Kong involving more than 4,000 residents across Hong Kong, Taiwan and mainland China found that 6.8% of Hong Kong respondents had been victims of scams, the highest percentage among the regions. Among these victims, over half reported losses greater than HK$100,000, with many highly educated individuals affected.
Christine Huang Yi-hui, professor at City University, said, “Fraud is not simply a matter of poor individual judgment. Rather, it represents a long-term battle involving information and trust.”
Authorities in Hong Kong have ramped up their response. In April, the HKMA said banks would be allowed to share data with the police to trace suspicious accounts, freeze questionable transactions and meet clients directly. In June, local police joined forces with counterparts in Macau and Thailand to clamp down on cross-border scam networks.
As the consultation proceeds, the regulator is seeking to strike a delicate balance between protecting customers and ensuring banks shoulder fair responsibility in preventing fraud.
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