HSBC's move to acquire, in certain cases, information about the contents of clients' safe deposit lockers has caused controversy. The bank has told this publication that privacy will not be compromised.

HSBC has caused controversy in Hong Kong after demanding the right to examine clients’ safe deposit boxes and saying it can get rid of any items considered offensive, illegal or likely to be a nuisance, media reports said. The bank has told this publication it respects client privacy and has acted to avoid potential abuses.

The Hong Kong/UK-listed banking group is not, this publication understands, demanding a right to inspect client's deposit boxes in all cases; rather, such a check would typically only happen if, for example, legal authorities with a warrant seek information in pursuit of an alleged criminal.

Safe deposit boxes are being subject to the same rigours of disclosure and reporting as conventional bank deposits and other structures through which people hold assets at a bank or storage facility. In recent years there has been development in specialist storage facilities for wealthy individuals’ art, jewellery, classic cars, gold and other valuables, such as through the Freeports businesses in locations such as Singapore and Switzerland. The private wealth management industry faces a continual challenge in setting the correct boundary between client privacy and secrecy.

Media reports said that HSBC has asked clients to sign and return the letter within one month to confirm their acceptance of the updated conditions. It is feared the bank will terminate the leases of customers who fail to sign the letter, reports said.

International Business Times quoted barrister Neville Sarony as saying the revised conditions gave the bank "totalitarian rights" over the contents of the boxes and offended the concept of personal privacy. "This is a ridiculous and grossly invasive power which makes a nonsense of the whole purpose of a safety deposit box," he said.

HSBC statement
“Respecting the privacy of our customers and protecting their security are vitally important to HSBC. We ensure that valuables and property deposited in our safe deposit lockers are highly secure and that only the lessee or someone appointed by them can have access to the locker. We understand that safe deposit lockers are a highly valued service to many customers in Hong Kong, as they have been for generations, and that trust is at the heart of customers' decisions to choose HSBC to provide this service," the bank said in a statement.

"But it is obvious that the nature of a safe deposit locker service means it has the potential for misuse for criminal purposes. HSBC has a clear commitment to defend the integrity of the financial system against activities such as money laundering. So, as a responsible bank, we have introduced several clauses to the conditions of lease for safe lockers to further strengthen our defences against financial crime and to enable us to co-operate with law enforcement agencies when required. We have also updated the conditions of lease of safe deposit locker for customers who leased a safe deposit locker before 18 December 2004 so that they have the same terms and conditions as customers who leased safe deposit lockers after that," it continued.

"We would also request our customers not to deposit any property which could become a nuisance or of illegal/offensive nature, like any property that is explosive, inflammable or liquid; or illegal drugs, offensive weapons, guns and stolen property. We want to reassure our valued customers that these changes to the terms and conditions will not in any way reduce the security and privacy of our safe deposit locker service," it added.

A letter sent by HSBC to clients regarding such deposit lockers said: "[W]e have also introduced a number of other amendments to the conditions, including (i) our right to dispose of any property in the safe deposit locker which is, amongst others, illegal or of an offensive nature and to recover from you reasonable expense incurred by us in connection with the disposal; (ii) our right to terminate the lease by notice to you with immediate effect in the event of your failure to comply with any of the conditions; (iii) our right to vary the conditions at any time upon giving you prior notice by such method(s) as we decide and you shall be deemed to have agreed to the amendments if we do not receive from you notice to terminate the lease before the expiry of the notice period; and (iv) clarification on our right to sell the contents of the safe deposit locker in the event of a force opening upon your failure to pay the rent when due."