How Should Existing Cross-Border Financial Arrangements Be Reviewed for Compliance in the Context of the Eight-Department Governance?

Tags: Cross-Border Financial Services Compliance Review of Existing Business Financial Regulation Customer Solicitation and Services Review of Licensing Requirements Data and Record Management

Author: Lawyer Zhang Jingxinyue, PRC-qualified Lawyer | Singapore Registered Foreign Lawyer

Editor's Note: On May 22, 2026, the China Securities Regulatory Commission released information that it had opened investigations into the cross-border business operations within China of Tiger, Futu, and Longbridge related entities, and issued advance notice of administrative penalties. On the same day, the CSRC and seven other departments jointly issued the Implementation Plan for the Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities, proposing a two-year concentrated campaign to ban illegal cross-border business activities by overseas securities, futures, and fund institutions.

In the previous article Observations on the Tiger, Futu, and Longbridge Incidents: Where Is the Boundary of “Domestic Business Operations” in Cross-Border Securities Business? | China-Singapore Legal News, we focused on the boundary of “domestic business operations” in cross-border securities business. Afterwards, many readers became more concerned about a practical issue: for cross-border financial accounts and related existing arrangements that are already in place, how should the regulatory changes be understood going forward?

This question cannot be answered simply with “yes” or “no.” Based on public information, the focus of this round of rectification is not a broad denial of all cross-border investment activities, but a concentrated crackdown on overseas institutions that conduct securities, futures, and fund business targeting investors in mainland China without Chinese regulatory approval. For already existing cross-border financial accounts and related existing arrangements, the more important task at present is not panic-driven disposal, but a systematic compliance review of account source, fund path, trading services, and documentation trail.

Existing arrangements should not be understood simplistically; however, old service models need to be re-examined.

First, one point needs to be clarified: this round of regulatory rectification should not be simply understood as a “one-size-fits-all” treatment of all existing arrangements, nor should it be simply interpreted as a denial of all cross-border investment activities.

But this does not mean that certain cross-border financial service models formed in the past can continue to operate unaffected.

For some time, certain overseas institutions or related service providers have relied on internet platforms, Chinese-language interfaces, community operations, domestic promotion, assistance from relationship managers, and other methods to actually provide investors in mainland China with account opening and registration, trading services, information push, and fund assistance arrangements. The core problem of such models is not merely where the account is opened, but whether the relevant business chain has substantively extended into mainland China.

Therefore, for existing arrangements, what truly needs attention is not a simple conclusion, but several more specific questions: How was the account opened? How were funds formed and transferred? Who provides the trading services, and where are they provided? Who collects, stores, and uses personal identity information, transaction records, and asset proof? If adjustment or disposal is needed later, can it be completed through a lawful, compliant, and traceable method?

These questions determine whether the relevant accounts and asset arrangements can withstand compliance review in the future.

01 First Line: Account Source

In practice, not all cross-border financial accounts are opened and serviced independently by locally licensed institutions in the place where the account is located. Some accounts may have been opened through domestic promotional links, community referrals, assistance from relationship managers, online tutorials, third-party intermediaries, or recommendations from acquaintances.

Such accounts do not necessarily pose problems, but several links need to be carefully examined:

• At the time of account opening, did the service provider have the corresponding qualifications?
• Did account-opening guidance, client communication, risk assessment, and subsequent services take place within mainland China?
• Were there domestic entities, domestic employees, domestic partners, or self-media accounts continuously involved in client conversion?
• After the account was opened, did it still rely on domestic customer service, community operations, Chinese-language investment research content, or technical support?

If an account is formally opened overseas, but from customer acquisition, account opening, and services to subsequent transaction support, it remains highly dependent on a domestic business chain, then the service model behind that account needs to be re-examined.

For relevant parties, the current approach should not simply rely on extreme statements such as “an account is absolutely safe as long as it is overseas” or “all accounts must be dealt with immediately.” A more prudent approach is to first retain account-opening documents, service records, fund vouchers, transaction records, and platform notices, and conduct a basic review of the account source.

02 Second Line: Fund Path

A cross-border financial account itself is not the only issue. What truly needs attention is whether the source of funds is lawful, whether the transfer path is compliant, whether fund movements are supported by complete documentation, and whether subsequent account adjustments and asset arrangements comply with relevant regulatory requirements.

In practice, at least the following questions need attention: Can the source of funds be clearly explained? During the formation of the funds, are there corresponding contracts, income vouchers, dividend documents, asset sale documents, or other supporting materials? When funds are transferred cross-border, are the transfers completed through formal financial institutions and compliant paths? Are basic documents such as bank statements, foreign exchange records, transfer vouchers, and tax materials retained? Are there arrangements involving third-party handling, collection or payment on behalf of others, or other circumstances in which the source and flow of funds cannot be explained? If later transactions involve account adjustment, asset disposal, or changes in relevant services, have China’s and the account location’s foreign exchange, tax, anti-money laundering, and financial regulatory requirements been considered?

It is particularly important to remind readers here: do not rush to dispose of existing assets through so-called “quick processing,” “special channels,” or “one-click arrangements” simply because of market sentiment fluctuations. During a regulatory rectification period, it is even more important to avoid creating new compliance flaws.

For existing fund arrangements, the core task is to review and ensure the end-to-end compliance of the relevant funds—that is, whether the source of funds, formation process, transfer path, account use, transaction records, and tax status can be reasonably explained and legally documented.

03 Third Line: Trading Services

One of the key issues in this round of regulatory attention is whether overseas institutions or related entities have, without permission, conducted securities, futures, and fund-related business services in mainland China, including marketing and promotion and processing trading orders.

For holders of existing accounts, two issues need to be distinguished: first, whether the account itself already exists; second, whether subsequent trading services still rely on unauthorized domestic business operation arrangements.

For example, do investors still receive trading support through domestic promotion portals, domestic customer service, domestic communities, domestic investment research personnel, or related technical systems? Is anyone substantively influencing trading decisions in the form of “investment research sharing,” “trading strategies,” “account management,” or “advisory services”? Are there circumstances in which another person operates the account, places orders, or manages the account on the investor’s behalf?

These arrangements may not only involve the risk of illegal cross-border business operations by overseas institutions, but may also bring risks to investors themselves in terms of suitability, fund security, dispute accountability, and evidence retention.

Therefore, at the current stage, the most important thing for existing arrangements is not how to continue trading in the short term, but several basic questions:

• Do you truly control the account?
• Do you understand the regulatory rules in the place where the account is located?
• Can you independently obtain account documents and transaction records?
• Do you know the legal identity of the service institution, service personnel, and fund channels?
• If a dispute arises in the future, do you know which jurisdiction, which regulator, or what type of professional to seek relief from?

These questions are more important than short-term trading itself.

04 Fourth Line: Document Retention and Data Compliance

In this round of eight-department rectification, in addition to securities regulators, multiple regulatory dimensions such as cyberspace administration, foreign exchange, anti-money laundering, and market supervision are also involved. This means that compliance review of cross-border financial business is no longer limited to “whether there is a license,” but will also extend to customer information, data flow, source of funds, and business records.

In the past, many investors submitted identity certificates, proof of address, bank statements, asset proof, tax resident status declarations, risk assessment documents, and other materials during the account opening and registration process. Who collects these materials, where they are stored, whether they are transferred cross-border, and whether they are used for subsequent marketing or trading services may all become part of future compliance review.

For existing arrangements, it is recommended to do at least three things:

• First, keep complete account documents, including account-opening materials, client agreements, risk disclosure statements, transaction records, fund statements, and platform notices.
• Second, sort out tax resident status, proof of source of funds, and the asset formation process, so as to avoid being unable to explain them in future bank reviews, tax filings, estate arrangements, or asset adjustments.
• Third, confirm the service institution’s data governance and client data protection arrangements, especially whether it has clear anti-money laundering review mechanisms, client information protection mechanisms, and cross-border data compliance arrangements.

The compliance risks of many cross-border financial arrangements do not emerge immediately at the initial stage, but gradually surface later in cross-border settlement, routine bank compliance reviews, tax filings, cross-border inheritance, changes in identity, marital or family matters, or dispute resolution. The more such arrangements involve household wealth, corporate funds, or multi-jurisdictional structures, the more necessary it is to prepare documentation and leave a legal trail in advance.

05 You May Start with a Basic Self-Checklist

Before taking specific disposal steps, relevant parties may first complete a basic self-check checklist:

After completing the above review, then determine whether it is necessary to adjust the account, change the service institution, optimize the holding structure, or supplement legal documents based on the specific situation. Any matter involving fund transfers, asset disposal, product conversion, or cross-border arrangements should not be decided solely on the basis of online information or intermediary advice.

Conclusion

Each round of regulatory reshaping will eliminate a batch of business models that rely on information asymmetry, non-standard paths, and ambiguous boundaries. For existing cross-border financial accounts and related existing arrangements, this does not necessarily mean panic, but it does mean that some previously “convenient but non-compliant” paths are losing their sustainability.

The truly prudent approach is to place existing arrangements back into the compliance framework for review. Where did the account come from, how were funds formed, who provides trading services, where is data retained, and how to handle, declare, pass on, and resolve disputes in the future—all these issues need to be sorted out one by one.

Future cross-border financial arrangements should not focus only on trading convenience or investment returns, nor rely solely on a single platform, a single account, or a single intermediary. More importantly, under the regulatory frameworks of China and the place where the account is located, the source of assets should be clear, fund paths compliant, documents complete, service entities identifiable, and risk responsibilities traceable.

For existing arrangements, the most important task at present is not to take drastic action immediately, but to complete a calm, systematic, and traceable compliance review first.

• This article is provided only as general legal information and industry observation based on public information, and does not constitute legal advice, investment advice, or a recommendation of financial products in China, Singapore, or any other jurisdiction.
• If further information is needed, please contact the professional team at China-Singapore Legal News. Specific matters should be assessed based on the entity’s qualifications, customer location, source of funds, transaction structure, data flow, tax resident status, and relevant regulatory requirements.

This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.