Note on the Responsibility to Maintain Client Data Confidentiality
Release Date: 2024-10-29
October 29, 2024
The Association has noted that the Housing Authority is proposing a reward of HKD 3,000 for those who report public housing abuse, a move that might raise concerns within the financial sector and among clients.
Financial institutions handle vast quantities of client data and are legally and contractually obliged to maintain its confidentiality. These institutions generally have internal management systems with access controls in place, ensuring that all data interactions are logged and governed by their internal policies.
Although financial institutions and their personnel are responsible for maintaining the confidentiality of client data, this obligation is not without exceptions. Under Hong Kong law, there are specific circumstances requiring financial institutions to report suspected illegal activities—such as serious crimes, corruption, breaches of anti-money laundering laws, and securities regulations—to law enforcement agencies, including the Hong Kong Police, the Independent Commission Against Corruption, Hong Kong Customs, and the Hong Kong Securities and Futures Commission. In such instances, the duty to report may override the need to keep client data confidential.
In terms of whether financial institutions and their staff must report client misuse of public housing to the Housing Authority, or if they may disclose client data to claim a reward, it is advisable to consult professional legal counsel before proceeding with any disclosures. Failure to do so could breach client confidentiality regulations, leading to client complaints, regulatory investigations, or sanctions, as well as possible violations of contractual obligations, resulting in civil liability.
The Association stresses the importance of maintaining client data confidentiality as essential to supporting Hong Kong's status as a premier international financial center. Misuse of client information by licensed professionals for personal gain could lead to client complaints and legal challenges, adversely affecting their professional growth. The Association advises industry professionals to act cautiously and adhere strictly to pertinent regulations, internal compliance guidelines, and professional ethical standards.
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association
The Association has noted that the Housing Authority is proposing a reward of HKD 3,000 for those who report public housing abuse, a move that might raise concerns within the financial sector and among clients.
Financial institutions handle vast quantities of client data and are legally and contractually obliged to maintain its confidentiality. These institutions generally have internal management systems with access controls in place, ensuring that all data interactions are logged and governed by their internal policies.
Although financial institutions and their personnel are responsible for maintaining the confidentiality of client data, this obligation is not without exceptions. Under Hong Kong law, there are specific circumstances requiring financial institutions to report suspected illegal activities—such as serious crimes, corruption, breaches of anti-money laundering laws, and securities regulations—to law enforcement agencies, including the Hong Kong Police, the Independent Commission Against Corruption, Hong Kong Customs, and the Hong Kong Securities and Futures Commission. In such instances, the duty to report may override the need to keep client data confidential.
In terms of whether financial institutions and their staff must report client misuse of public housing to the Housing Authority, or if they may disclose client data to claim a reward, it is advisable to consult professional legal counsel before proceeding with any disclosures. Failure to do so could breach client confidentiality regulations, leading to client complaints, regulatory investigations, or sanctions, as well as possible violations of contractual obligations, resulting in civil liability.
The Association stresses the importance of maintaining client data confidentiality as essential to supporting Hong Kong's status as a premier international financial center. Misuse of client information by licensed professionals for personal gain could lead to client complaints and legal challenges, adversely affecting their professional growth. The Association advises industry professionals to act cautiously and adhere strictly to pertinent regulations, internal compliance guidelines, and professional ethical standards.
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association
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