China launches 2-year crackdown on illegal cross-border securities trading

China launched a sweeping two-year campaign against illegal cross-border securities, futures, and fund trading, targeting unauthorized offshore investment services offered to mainland investors.

The campaign was jointly announced by the China Securities Regulatory Commission and seven other government bodies, with the approval of the State Council, according to a regulatory plan released Friday.

The measures aim to dismantle unlicensed offshore investment services targeting Chinese mainland investors and guide investors toward regulated channels for overseas investment.

Under the initiative, overseas institutions will be barred from marketing securities, futures, and fund products in China without authorization. They will also be banned from providing account-opening services, executing trades, or facilitating fund transfers for domestic clients.

The crackdown also covers domestic entities that assist such operations, including intermediaries soliciting investors, companies providing websites, trading software or customer support, and internet platforms or social media accounts publishing illegal promotional content.

Authorities will also inspect violations related to foreign exchange controls, anti-money laundering rules, cybersecurity requirements, and personal data protection.

Banks providing accounts for cross-border investment will face closer scrutiny and will be required to strengthen compliance checks on outbound foreign exchange transactions, as regulators seek to curb illicit capital outflows, including those routed through underground banking networks.

In a separate statement, the securities regulator said it plans to penalize Futu, Up Fintech’s Tiger Brokers, and Longbridge Securities for operating on the mainland without a license.

The regulator said it intends to confiscate “illegal gains” from both domestic and overseas entities of the firms and impose severe penalties.

US-listed shares of Up Fintech and Futu fell sharply in premarket trading following the announcement.