Gabriela Kennedy's Asia Pacific column in the latest issue of Computer Law & Security Review features a Mayer Brown article titled "The Future is Here: New Guidelines Issued by the HKMA for Virtual Banks” by Gabriela Kennedy and Karen H.F. Lee.
In this article, Gabriela and Karen examine the revised Guideline on Authorisation of Virtual Banks (Revised Guideline) issued by the Hong Kong Monetary Authority (HKMA) on 30 May 2018, which sets out the principles that the HKMA will take into account in deciding whether to authorise a virtual bank in Hong Kong. The Revised Guideline is intended to encourage virtual banking in Hong Kong, and further promote financial inclusion and fintech development in Hong Kong.
The authors take a look at the main changes introduced by the Revised Guidelines, including ownership, supervision, technology risk and risk management and exit plan. They also explain that the HKMA does not, in principle, object to outsourcing of IT or business functions by a virtual bank to a third party service provider, provided that any material outsourcing is discussed with the HKMA in advance, and complies with the HKMA’s Supervisory Policy Manual on Outsourcing. The virtual bank must maintain adequate security controls over the service provider and must ensure that confidentiality and integrity of customer information is not comprised. They conclude their article by highlighting the importance of having proper legal contracts and protections in place before submitting an application for a virtual banking license.
Gabriela is a member of the editorial board of Computer Law & Security Review and edits the Asia Pacific column, a country-by-country analysis of the latest legal developments, cases and issues relating to IT, media and telecommunications in the Asia Pacific region.