KPMG and Deloitte ask staff to use burner phones in Hong Kong: Treat it as mainland China

As Hong Kong faces a change in political dynamics and increased control from Beijing, global audit and consulting firms are implementing new security measures. Reportedly, Deloitte and KPMG have advised some US-based executives to use burner phones when visiting Hong Kong.

A burner phone is a low-cost mobile phone used for short-term, occasionally anonymous, usage, after which it can be disposed of. While certain people may use burner phones with cash to avoid contracts, others employ them for unlawful activities.

Hong Kong is one of the leading financial centres in the Asia Pacific. 

Concerns and measures

• Previously seen in industries like aerospace and semiconductors dealing with mainland China, the use of separate phones and laptops is now expanding to Hong Kong, according to a Financial Times report.
• The move comes in the wake of Beijing's imposition of a national security law in 2020.
• It also caused the US to revoke the territory's special trade status.
• This shift has prompted companies to reconsider the risks associated with operating in Hong Kong, even for non-sensitive projects, added the report.

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The 2020 National Security Law by the Beijing-led Chinese Government, brought in strict regulations and a legal foundation for preventing, suppressing, and penalising actions and behaviours that pose a threat to national security.

Data security and concerns

• While not explicitly asked by many other companies, executives suggest concerns over data security and potential hacking incidents are driving the adoption of separate devices, said the report.
• The report, quoting a senior executive at a cyber security firm, said, “We have been recommending for several years that clients treat the risk of being in Hong Kong as the same as mainland China.”
• “There is a range of risks, up to and including the risk of infiltration by a state-backed hacker,” highlighted a UK-based consultant at a Big Four firm.

Impact

• According to the report, some senior staff have been reluctant to visit Hong Kong due to the inconvenience of leaving their usual devices behind.
• This shift has become more noticeable as pandemic-era restrictions have eased, allowing executives to resume travel to the territory, the report said.
• “People are not prepared to come here,” said an executive of a consultancy firm.
• The policies, in place for over a year in some cases, are gaining prominence as more companies prioritise caution.

While Deloitte and KPMG have put out such rules, not all Big Four firms have followed them. PwC told the FT that it does not have a similar policy.

Summing up the recent dissolution of Hong Kong's autonomy, the city's chief executive, John Lee, said, "One country, two systems."