Is It Really as Safe as It Seems to Handle Overseas Accounts Domestically?

Is It Really Safe to Hold Overseas Accounts from Within China?

In the evolving landscape of global finance, is it truly safe for individuals and businesses in China to hold overseas accounts? As globalization accelerates and cross-border capital flows become more frequent, an increasing number of Chinese residents and enterprises are turning their attention to international financial markets. They open overseas accounts to diversify assets, invest, manage wealth, and even optimize taxes. However, beneath this seemingly globalized strategy lies a range of risks and challenges that cannot be ignored-especially in the current context of a complex and shifting global economic environment and tightening financial regulations.

1. Growing Cross-Border Financial Activities

In recent years, there has been a noticeable rise in the number of Chinese residents and companies opening bank accounts and investing overseas. According to the 2025 RMB Internationalization Report released by the People’s Bank of China, by the first half of 2025, personal outbound investment balances had increased by more than 15% year-on-year, with a significant portion attributed to asset allocation through overseas accounts.

High-net-worth individuals are increasingly choosing to open offshore accounts in places like Singapore, Switzerland, and the United States to diversify their assets and spread risk. At the same time, some domestic financial institutions have begun offering cross-border services, assisting clients with overseas account opening, fund transfers, and investments-further fueling this trend. Yet, this convenience also comes with hidden risks.

2. Compliance Risks The Challenge of Stricter Regulation

While the technical aspects of opening and using overseas accounts have become relatively mature, compliance remains a growing concern. In recent years, many countries have tightened regulations on financial accounts, particularly regarding capital flows from China.

For example, in August 2025, the U.S. Treasury updated the enforcement guidelines of the Foreign Account Tax Compliance Act FATCA, requiring more than 300,000 financial institutions worldwide to report information on accounts held by U.S. taxpayers. This means that if Chinese residents open overseas accounts without proper disclosure, they may face tax investigations or even asset freezes.

The European Union has also intensified monitoring of suspicious capital flows. In October 2025, the European Banking Authority EBA issued a warning stating that certain funds from Asia posed a money laundering risk and called for increased scrutiny of non-resident accounts. For Chinese users, this translates into higher compliance costs and operational complexity.

3. Information Security and Privacy Concerns

Beyond regulatory risks, data privacy is another major concern. In recent years, several high-profile data breaches at international banks have drawn widespread attention. For instance, in September 2025, a well-known Swiss private bank was exposed for leaking thousands of client records due to a system vulnerability-among them were some Chinese clients whose personal and financial information was compromised.

Although most international banks claim to use advanced encryption to protect client data, the global cybersecurity landscape remains precarious. With the intensifying technological competition between China and the U.S., issues of data sovereignty and information security have become increasingly sensitive.

4. Liquidity and Currency Risk

Another often-overlooked issue is the risk related to fund liquidity and currency fluctuations. While overseas accounts offer broader investment opportunities, sudden policy changes or market volatility abroad can lead to fund freezes or difficulties in repatriation.

Take the sharp depreciation of the Turkish lira in November 2025 as an example some Chinese investors holding accounts in Turkey suffered significant losses due to extreme exchange rate fluctuations and were unable to transfer their funds back home in the short term. Some countries impose temporary capital controls during times of crisis-India and Argentina have both done so in the past.

For ordinary investors, overseas accounts offer more options, but also come with greater exposure to currency volatility and uncertainty in fund repatriation.

5. Tightening Domestic Regulatory Policies

In recent years, Chinese financial regulators have also strengthened oversight of cross-border capital flows. In October 2025, the State Administration of Foreign Exchange issued a notice emphasizing the need to enhance monitoring of personal foreign exchange accounts and crack down on illegal capital outflows. This means that any large, unreported cross-border transfers could be flagged for scrutiny.

At the same time, some commercial banks have scaled back support for overseas account openings. Media reports in late 2025 indicated that several state-owned banks had suspended services for opening overseas accounts for individuals or required more detailed explanations of fund purposes. This reflects the regulators’ cautious approach toward cross-border financial activities.

Conclusion

Against the increasingly complex backdrop of global finance, while overseas accounts offer new avenues for asset allocation, the associated risks cannot be underestimated. From compliance and data security to liquidity and tightening regulations, each aspect carries potential consequences.

For individuals and companies considering overseas accounts, it is crucial to rationally assess personal or business needs, fully understand local laws and regulations, and choose compliant channels. Only through such careful planning can one truly safeguard their financial assets.