About

Headed by Carmen Kan, the legal department of Bank of China (Hong Kong) consists of 19 lawyers and four paralegals, covering areas including legal, compliance, operational risk, fraud risk and complaint handling. This is a unique management structure among the Banks’ legal teams in Hong Kong. ‘Legal, compliance, operational and fraud risks are examined by different teams within the same department and these teams work coherently and deliver advice and suggestions and complete product due diligence all in one go. This allows product development to be processed in an agile manner and product managers and business teams within the bank to have comfort and assurance that all the above risks will be tackled by the combined department swiftly. For the legal team, on top of providing legal advice, this gives an extra dimension to work together with other risk teams which makes the delivery of our legal services much more effective and creates much more value to the bank’, Kan explains. During the past 12 months, the legal team has participated in a number of significant and innovative initiatives and major projects, executing these initiatives, such as blockchain banking and transactions in an agile manner, with all legal risks properly assessed and considered. The legal team encourages the business to embrace all fintech initiatives while keeping legal and compliance risks identified, assessed, and controlled. As a consequence, Bank of China (Hong Kong) was able to pioneer the first blockchain-based mortgage loan, and thus provide the regulator with the necessary concept-proof to enable larger scales of blockchain applications in Hong Kong’s financial industry. With this as a basis for development, Hong Kong’s banking industry was able to launch eTradeConnect in September 2018, being the first large-scale blockchain-based trade finance platform in Hong Kong with Bank of China (Hong Kong) as one of the seven founding banks. During the designing and development of eTradeConnect, the legal team had worked seamlessly with the product managers, IT experts, external legal counsel, regulators and industry peers, and has successfully tackled a vast array of legal and compliance hurdles including data protection and competition law issues. The team has also contributed largely in other initiatives including the Bank of China’s new pay app, the grant of license of a virtual bank, a US$3bn additional tier 1 capital (AT1) issuance, and the finger vein authentication service. According to Kan, ‘the next 12 months will likely see volatility in the markets and the global economy generally, and this may mean only short market windows will be available for our bank and our clients to capture investment opportunities. There are usually sharp increases in the number of enquiries in times of uncertainty, and the legal team will be expected to provide timely and accurate legal advice to all front office users’, she says. Reforms in LIBOR and alternative reference rates, and the initial and variable margin reforms on the derivatives front mean that the legal team will need to also assist the front offices in implementing all the changes over the next 12 months and beyond. ‘Due to the sheer size of our bank and the volume of transactions, the manpower and the legal complexity of these reforms cannot be underestimated’, Kan comments. In addition, the bank is also always looking at opportunities in the ASEAN, Asia Pacific and Greater Bay Area, ‘all of which will mean our lawyers will need to come out of our comfort zones and participate in projects and new service offerings in other jurisdictions. The next 12 months will definitely be an interesting and intellectually challenging year for the legal team’, Kan says.