Detailed interpretation: If funds are transferred from a local Hong Kong bank account to a securities firm, they can generally be considered as legally obtained foreign funds.

I happened to see a friend in the comments asking about this, so I'll discuss this issue together.

The phrase "If funds are transferred from a local Hong Kong bank account to a securities firm, they can generally be considered as legally obtained foreign funds" refers to the first level of judgment at the securities firm's receiving end.

This is because the Hong Kong Securities and Futures Commission requires mainland investors to use accounts opened in their own names at licensed banks in Hong Kong or banks in qualified jurisdictions for settlement, and all subsequent deposits and withdrawals must be conducted through these bank accounts.

In other words, the securities firm sees that the money comes from the client's own Hong Kong bank account, without being deposited directly from a mainland account or paid by a third party. This initially satisfies the requirements of “designated bank account” and “overseas settlement account” at the securities firm level.

Furthermore, Appendix B of the Hong Kong Securities and Futures Commission clearly requires mainland investors to declare that the funds come from a legitimate source outside the mainland and requires the securities firm to ensure that deposits and withdrawals are made only through the client's own licensed Hong Kong bank account or accounts from qualified jurisdictions.

So from the broker's perspective, if the funds are transferred from the client's own Hong Kong bank account to the securities firm, the broker can consider it an important compliance basis, which is not an issue. However, this does not mean that the money entering Hong Kong's banks is without problems, as brokers assume that banks will handle AML.

Therefore, when funds enter banks in Hong Kong, there is a possibility that the bank may require AML procedures, which include checks on customer identity, source of funds, intended use of transactions, suspicious transactions, and account activity during account opening. In other words, the money you can successfully deposit in a Hong Kong bank is theoretically compliant.

Why do I say theoretically? Because the investigation is still ongoing, and especially with recent changes in regulations, it essentially prompts banks and brokers to re-examine past accounts.

In general, Hong Kong banks are not a remedy for overseas funds but rather a poison, especially when trying to avoid CRS. When opening an account and depositing money in Hong Kong, one must be prepared to pay taxes.

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