On May 22, 2026, the China Securities Regulatory Commission (CSRC), the State Administration of Foreign Exchange (SAFE), and six other ministerial agencies jointly issued the Implementation Plan for the Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities. This milestone policy formalizes the crackdown on unlicensed cross-border brokerage operations into a permanent, multi-departmental regulatory framework. In alignment with these directives, financial institutions across Hong Kong and overseas have significantly elevated their onboarding compliance, purpose-of-account verifications, and Anti-Money Laundering (AML) checks.
To assist you in evaluating the compliance status and risk exposure of your offshore portfolios, we have detailed the core regulatory mechanisms and practical impacts based on different geographic locations and client profiles below:
Core Regulatory Framework
- Two-Year Grace Period (“Sell-Only” Mode)
Existing clients holding Mainland domestic status are granted a two-year transition period (expected to run through May 2028) to wind down their portfolios. During this window, affected accounts are strictly restricted to a one-way position-reduction mode. New buy orders and any form of fresh funding are prohibited; clients are only permitted to sell down existing holdings and withdraw cash.
- Full Shutdown Post-Grace Period
Upon expiration of the two-year rectification period, offshore brokerages must completely terminate all websites, trading applications (Apps), and supporting server access within Mainland China. While existing client assets remain legally protected and safely held in offshore custody, domestic clients must no longer be able to log in, view, or operate their portfolios from within the Mainland.
- Dormant Account Purge
As part of the retroactive compliance audits mandated by the new scheme, overseas institutions offering access to Mainland Chinese accounts are now actively clearing out inactive portfolios. The new rules mandate that any offshore account carrying a zero balance with no transactional activity for over 12 consecutive months faces mandatory, automated closure.
Policy Applicability by Location and Profile
Scenario A: Clients Currently Residing or Operating within Mainland China
- Category 1: Pure Mainland Residents (No HKID)
- New Onboarding: The window is entirely closed. Cross-border online brokerages should completely cease accepting new account applications from Mainland domestic users. For banking services, remote witness programs via domestic branches maintain exceptionally high fixed-deposit thresholds. If attempting in-person account openings in Hong Kong, clients should face rigorous compliance grilling regardless of the stated purpose (e.g., tourism, consumption, or insurance), and verified proof of personal tax IDs and clear income streams are mandatory.
- Existing Portfolios: Accounts should be strictly locked into the two-year sell-and-withdraw-only mode. While existing balances are secure and withdrawable to personal offshore bank accounts, any fresh funding or inbound deposits must not be allowed. Clients holding only Mainland identity should face system rejections on new deposits, even if attempted via their personal Hong Kong bank cards.
- Category 2: Mainland Chinese Citizens holding HKID (Without a Local HK Address Proof)
- Status & Operational Risks: On paper, individuals holding a HKID are excluded from the definition of “Mainland domestic incremental users,” meaning institutions are legally permitted to service them. However, if a client frequently operates the account via a Mainland IP address, brokerage risk-control systems should still trigger automated trade restrictions or demand additional compliance re-verification.
- Practical Requirements: To secure unimpeded trading and funding capabilities while in the Mainland, clients must proactively update their profile information to their HKID and provide an alternative proof of residential address bearing their name (e.g., Mainland or offshore bank statements from within the past 3 months) alongside a standard compliance declaration.
Scenario B: Mainland Chinese Citizens Located Outside Mainland China
- Category 3: Holders of HKID + Hong Kong Address Proof
- Status & Operations: Recognized as local Hong Kong clients. The restrictions under the May 22 regulatory scheme do not apply to this category.
- Practical Requirements: Full and normal access to opening and operating banking or brokerage accounts remains completely intact for both new and existing portfolios. Clients are free to execute deposits, buy orders, and general asset allocations, subject only to routine local AML checks and standard source-of-wealth declarations.
- Category 4: Mainland Residents Temporarily Visiting Hong Kong
- Status & Operations: Physical presence in Hong Kong on a tourist, business, or entry visa does not alter a client’s legal status as a Mainland domestic tax resident. Financial institutions should evaluate compliance risks primarily based on permanent identity documents and tax residency rather than immediate, real-time geographical location during onboarding. Consequently, opening new offshore investment accounts under a temporary visitor status remains heavily restricted.
Disclaimer: As internal compliance thresholds, risk boundaries, and exact execution timelines vary significantly across individual banks and brokerages and remain subject to continuous real-time updates under the May 22 Regulatory Scheme, this briefing is for general informational purposes only and does not constitute formal legal, compliance, or investment advice.
