With mainland China and Hong Kong regulatory authorities cracking down on cross-border investment flows as never before, private banks have been delaying their commercial activities in China, hindering senior staff from traveling to the mainland.
On Friday, Bloomberg reported, citing sources familiar with the matter, that UBS Group’s mid-year wealth outlook event scheduled to be held in China this month has been postponed, although other activities will proceed as usual.
HSBC Holdings plc’s operations in China are still ongoing, but the company does not encourage private bankers based in Hong Kong to make unnecessary trips to the mainland. An unnamed source mentioned that some individuals who had planned to attend the event have already canceled their trips to the mainland.
Offshore private bankers visiting the mainland have always been in a regulatory gray area, facing strict compliance restrictions. When relationship managers travel to the mainland, they are prohibited by law from soliciting business or discussing specific investment products, but are allowed to engage in general relationship-building discussions with clients.
However, past arrests of bankers by the Chinese Communist Party and a poor record of outbound restrictions have raised concerns. Beijing has recently launched its most severe crackdown to date on illegal cross-border transactions and capital flight, prompting major foreign banks to reevaluate their business strategies in mainland China.
A spokesperson for HSBC Bank stated, “We look forward to hosting our bi-annual investment outlook event for Chinese clients next week with travel arrangements proceeding as scheduled. “UBS declined to comment.
The China Securities Regulatory Commission recently fined three large online brokerage firms a total of over $330 million for providing overseas trading services to mainland clients without approval from regulatory authorities. Regulators also instructed all non-compliant retail accounts to be liquidated within two years.
The Hong Kong regulatory authority has also intensified its supervision, directing local banks to ensure all new customers sign clear statements confirming that the funds in their investment accounts come from regions outside mainland China.
According to Bloomberg, a source mentioned that these measures have already impacted new business as companies are concerned that even if clients sign statements, regulators may still require specific proof of the source of overseas assets.
Manus Costello, Temporary Chief Financial Officer of Standard Chartered Bank, revealed at a Goldman Sachs conference held in Zurich on Wednesday that 30% of the bank’s new net capital comes from global Chinese clients, with their funds already located overseas. He stated, “We are clearly reviewing policies and procedures, and ensuring compliance.”
Standard Chartered Bank announced they are reevaluating their relevant policies.
For years, mainland residents have been using Hong Kong’s financial system to bypass Beijing’s strict capital controls. According to China’s capital control regulations, each mainland resident is limited to exchanging $50,000 annually.
However, despite these regulations, a continuous flow of mainland wealth has been entering major banks, asset management companies, and insurance firms in Hong Kong. Based on data from the International Finance Association, due to weak domestic economic prospects and a desire for global asset diversification, outbound funds from Chinese residents reached a record $807 billion in 2025.
Prior to this, Beijing had already instructed online brokerage firms to cease soliciting new domestic investors and banned the use of Chinese credit and debit cards to purchase insurance products in Hong Kong. Simultaneously, Chinese tax authorities are intensifying efforts to levy taxes on overseas income.
Shortly after this wave of tightened overseas regulatory actions, major Chinese state-owned banks operating in Hong Kong quietly suspended opening new offshore wealth management accounts for mainland residents. At the same time, international companies are significantly enhancing due diligence on existing savings and investment portfolios.
Media reports indicated that late on Thursday, the East Asia Bank’s Shanghai branch had stopped opening Hong Kong bank accounts for mainland clients, and as a result of this news, the stock prices of several financial giants in Hong Kong also dropped.
On Thursday, Standard Chartered Bank dropped by 7.6% on the London stock market, HSBC Bank also fell by around 6%, before narrowing losses. Prudential plc, benefiting from a surge in cross-border insurance purchases, tumbled by 6.9% in the Hong Kong stock market, marking a six-month low.
On Friday, the Hong Kong stock market continued to decline.