Hong Kong banks tighten scrutiny of Chinese clients after trading curbs

[HONG KONG] Hong Kong banks are ramping up scrutiny of mainland Chinese clients opening savings and investment accounts, as part of a broader push to stem capital flight after Beijing launched an unprecedented crackdown on illegal cross-border trading.

Some major Chinese lenders operating in the financial hub have suspended the opening of investment and wealth management accounts for mainland residents, people familiar with the matter said.

Banks have also raised the threshold for mainland applicants seeking savings accounts and tightened due diligence requirements, the people said, asking not to be named discussing private information.

Meanwhile, Hong Kong regulators have instructed banks in the city to require a new declaration clause for prospective clients, forcing them to confirm that the source of funds for investment accounts is from outside mainland China, the people added.

Mainland residents have long flocked to Hong Kong to bypass Beijing’s strict capital controls, which limit annual foreign currency purchases to US$50,000 per person. The influx of mainland money has been a lucrative driver for the city’s major lenders. 

The heightened scrutiny follows Beijing’s most aggressive campaign yet against illegal cross-border trading.

On Friday (May 22), the China Securities Regulatory Commission slapped more than US$330 million in combined fines on three online brokers for operating on the mainland without a licence.

The move marks a sharp escalation from late 2022, when regulators ordered online brokerages to rectify illegal activities and stop onboarding new onshore investors.

The clampdown also coincides with an intensifying drive by Chinese tax authorities to collect taxes on offshore income.

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Hong Kong regulators are moving in lockstep. The Securities and Futures Commission (SFC) ordered brokerages in the city to audit their client onboarding processes after a review exposed document forgery and weak cross-border compliance.

Under stringent new rules targeting mainland investors, Hong Kong brokerages must immediately close any accounts opened with suspected or forged documents, as well as zero-balance dormant accounts.

Fund deposits, settlements and withdrawals must be conducted exclusively through bank accounts held in the client’s own name at eligible banks, and written investor declarations will be mandatory during onboarding.

The Hong Kong Monetary Authority (HKMA) issued a five-page circular last week on additional measures, requiring banks to close investment accounts that were opened using “questionable or forged documents” and to obtain written declarations from the Chinese Mainland investor, among other requirements.

“The banking industry will cooperate with the latest guidelines from relevant regulatory authorities to ensure the compliant and efficient operation of the account opening process,” a spokesperson for the Hong Kong Association of Banks said in a statement.

“Overall, the guidelines have little impact on the account opening process.”

The SFC and HKMA did not immediately respond to requests for comment.

About US$500 billion is expected to have flowed out of China in 2025-2026, IIF estimated.

BOC Hong Kong reported a 21 per cent surge in high-end cross-border customers in 2025.

HSBC has seen a roughly 30 per cent increase in Hong Kong customers since January 2023, with two-thirds identifying as non-resident HSBC One customers. These new clients drove a 20 per cent growth in invested assets for investment products.

Standard Chartered onboarded 275,000 affluent, new-to-bank customers globally in 2025, counting Hong Kong as its largest market. BLOOMBERG