Note: On 22 May 2026, the China Securities Regulatory Commission (CSRC) announced that it had opened investigations into entities associated with Tiger Brokers, Futu and Longbridge for suspected illegal cross-border business development in mainland China, and issued prior notices of proposed administrative penalties. On the same day, the CSRC and seven other departments jointly issued the Implementation Plan for the Comprehensive Regulation of Illegal Cross-Border Securities, Futures and Fund Business Activities, proposing a two-year campaign to crack down on the illegal cross-border operations of offshore securities, futures and fund institutions.
After the announcement, the most common question in the market was whether all cross-border investment activities would be affected. Based on the publicly available information, the focus of this campaign is not to reject “offshore investment” in general, but to clarify the regulatory boundary applicable when offshore institutions provide securities, futures or fund services to investors in mainland China.
The key issue is whether an offshore institution, without approval from the Chinese regulators, uses apps, websites, account-opening links, online groups, client managers, technical systems or funding assistance to reach customers, convert leads into clients and provide transaction services in mainland China.
01 The regulatory focus is not “investment”, but how customers are brought into investment
For several years, a common market assumption was that, as long as the account, platform and licence were all offshore, the business should be regarded as offshore business. The latest regulatory action shows that the test does not depend only on the location of the account or the place of incorporation. It also depends on whether key business activities take place in mainland China or are substantively directed at investors in mainland China.
More precisely, the regulator is not looking only at the investment result. It is examining whether an offshore institution substantively provides the relevant financial services to mainland investors through onshore customer contact, onshore conversion and onshore service delivery.
According to public information released by the CSRC, the relevant domestic and offshore entities provided securities-related services in mainland China—such as securities marketing and promotion and the handling of trading instructions—without approval or the required securities business licences, and obtained related income.
This is the important lesson from the current campaign: whether a business constitutes onshore business development cannot be determined simply by looking at where the account or institution is registered. The analysis must also consider whether customer contact, account-opening conversion, trading services, fund transfers and data processing have a substantive connection with mainland China.
02 Which activities are more likely to cross the “onshore business development” red line?
Based on the publicly available information and previous regulatory approaches, the high-risk activities can broadly be divided into four stages.
First, customer contact.
Examples include using advertisements in mainland China, Chinese-language websites, social media, Xiaohongshu, WeChat groups, video accounts, KOL content and offline events to attract and promote services to users in mainland China.
Second, conversion.
This includes using links, invitation codes and operating instructions to guide customers through account opening, identity verification and risk assessments.
Third, trading.
Examples include receiving, processing or transmitting trading instructions in mainland China through relevant systems, customer service or operational arrangements, or substantively participating in customers’ trading decisions through “investment research sharing”, “trading strategies” or “advisory services”.
Fourth, funding.
This includes providing improper assistance with fund transfers, deposits, withdrawals or cross-border payments, or arranging fund movements for customers through non-compliant means. Once such arrangements are connected with securities, futures or fund services, they may raise multiple compliance issues involving securities regulation, foreign-exchange administration and anti-money laundering.
03 A common misconception: an offshore licence does not automatically permit service to Chinese customers
The case also carries an important warning for institutions in Singapore and other offshore financial centres.
A common belief in the market is: “I hold an offshore licence, my company is offshore, and as long as the business is conducted offshore, I can serve Chinese customers.” From a regulatory perspective, this understanding is incomplete. In practice, it is one of the most common and easily overlooked compliance misconceptions among cross-border institutions.
Taking Singapore as an example, a licence issued by the Monetary Authority of Singapore (MAS) addresses whether the institution may lawfully conduct the relevant business in Singapore. It does not automatically answer whether the institution may market to investors in mainland China, open accounts for them, provide trading services or arrange funding, or conduct any other activity requiring approval from Chinese regulators.
If a customer in mainland China is reached through a Chinese-language website, WeChat, online groups, social media, offline events or an onshore partner, and is then guided through account opening, funding and trading, the entire arrangement may still be disassembled and examined as potential “onshore business development”, even if the account is ultimately opened offshore.
This is one of the risks that many cross-border institutions currently overlook.
An offshore licence is not a “passport” for cross-border business development. The real questions are: where was the customer reached, where did the business conversion take place, where was the trading instruction issued, whether fund transfers complied with applicable rules, and how were customer identity information, trading records, bank-account details and tax-residency information collected, stored, used and transferred across borders?
04 What should investors and institutions watch for?
For individual investors, the regulatory action does not mean that “all offshore investment activities have been rejected”. However, investors should be alert to the following risks:
- Do not readily trust marketing claims such as “we will open an account for you”, “one-click overseas investment” or “low-threshold global asset allocation”.
- Do not use unofficial channels for fund transfers, account opening or trading arrangements. In particular, avoid any arrangement intended to circumvent foreign-exchange, anti-money-laundering or financial-regulatory requirements.
- Do not allow another person to handle the entire process of account opening, identity verification, risk assessment or trading on your behalf.
- Maintain basic risk awareness when dealing with account-opening links, delegated trading, rebate referrals, stock recommendations in online groups or purported internal channels. Understand the rules and risks through lawful channels recognised by regulators.
For institutions, the key question is not merely whether they hold an offshore licence. The entire business chain must withstand a regulatory dissection. A quick self-check can start with these questions:
- How are customers reached?
- Does account opening and conversion occur in a mainland-China context?
- Is there any marketing, promotion, customer service or online-group operation directed at customers in mainland China?
- Does the institution receive, process or transmit trading instructions from mainland China?
- Does it provide advice on taking funds out of China, foreign-exchange conversion or funding channels?
- Does any onshore partner, referrer, KOL or social-media account participate in customer acquisition?
- Does it collect, store or transfer across borders the identity information, bank-account details, asset evidence, tax-residency information or trading records of customers in mainland China?
These questions are often more important than where the institution is registered.
Conclusion: cross-border investment is not rejected; the business boundary is being redrawn
The policy direction is not a simple rejection of cross-border investment itself. It is a reaffirmation of the boundary applicable to cross-border financial business models.
For cross-border financial institutions, wealth-management firms, family offices, investment advisers and related service providers, what matters in the future is not simply placing the entity, account or server offshore. Customer contact, business conversion, trading services, funding arrangements and data processing must all be capable of being explained, evidenced and documented within the regulatory frameworks of the relevant jurisdictions.
Cross-border business is not prohibited, but a licence from one jurisdiction cannot be used to cover the regulatory boundary of another. The red line has always existed; it is now being stated more clearly.
- This article is for legal education and industry observation based on publicly available information only. It does not constitute legal advice, investment advice or a recommendation of any financial product in China, Singapore or any other jurisdiction. Specific matters require a case-by-case assessment of the relevant qualifications, customer locations, business model, source of funds, transaction structure, data flows and regulatory requirements.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.