Singapore—Concerned by Beijing’s expanded efforts to track overseas wealth, wealthy Chinese individuals are once again viewing the United States as a safe haven for their funds.
Private bankers and lawyers serving Chinese clients say that inquiries about opening U.S. bank accounts have significantly increased in recent months since Beijing imposed retroactive taxation on offshore wealth in July. Some clients are moving assets previously held in Singapore or Hong Kong to the United States to further distance themselves from Beijing’s reach.
“This situation has become quite common,” said Keith Tan, CEO of Golden Acacia Capital, a Singapore-based firm that helps Chinese clients manage offshore portfolios. He noted that clients began planning to transfer funds to the U.S. in July, with some completing account openings in less than two months. “For Chinese clients, the barrier to opening a U.S. account and transferring assets is not high.”
Tan noted that wealthy clients often choose large private banks, while smaller accounts tend to flow to regional banks or online brokerages.
With China’s new tax regime for offshore trusts taking effect, this wave of relocation has become more urgent. In July, Chinese authorities stated that income and gains from overseas trusts held by Chinese tax residents will be taxed at 20%, sparking a rush to raise cash and seek alternative structures.
Lawyers in Singapore and Hong Kong have been assisting clients in calculating their tax liabilities and helping to dissolve trust structures, sell shares in publicly traded companies, or secure loans to pay high tax bills.
Meanwhile, the United States is not part of the Common Reporting Standard (CRS) framework. CRS is a mechanism under the OECD that enables automatic exchange of financial account data among more than 100 jurisdictions. Under this mechanism, banks in Singapore and Hong Kong are required to report accounts associated with China to Beijing, whereas U.S. banks have no such obligation.
James Wang, CEO of Blue Brick Consulting Group and a private client tax advisor, said that non-resident clients who open foreign bank accounts in the United States may still find investment vehicles with lower or no reporting obligations to the IRS. However, Wang also noted that China’s latest regulations require individuals classified as Chinese tax residents to self-report their global income to Beijing.
A wealth planning advisor based in New York who works with Chinese family offices said that New York banks are seizing the opportunity to offer a solution that may help Chinese clients evade their home country’s tax authorities. According to the advisor, U.S. banks are now struggling to keep up with rising demand.
The consultant, who requested anonymity due to discussing banking procedures, said: “As inquiries have surged, some banks have shortened the time customers have to meet their minimum capital commitment requirements, or their accounts risk being closed.”
Tan said that Chinese families whose children hold U.S. green cards also use foreign grantor trusts—structures that are tax-wise treated as owned by their non-U.S. settlors—to mitigate certain U.S. tax risks. He added that low-tax states such as Nevada and Florida have become popular choices.
Clifford Ng, a partner at Zhonglun Law Firm in Hong Kong, said: “They are betting that they won’t be disclosed, because the U.S. does not participate in information sharing under the CRS framework; they can evade tax authorities.” Ng also expects that some individuals with Hong Kong or Singapore residency status, whose trusts have not yet been flagged by Beijing, may dissolve these structures and move their funds.
Hiding is not tax planning.
Lawyers caution that while this pathway may currently appear effective in avoiding disclosure, it is likely only temporary. Ng stated that funds held offshore have most likely already been reported to Beijing through CRS and “have already come into China’s view at some point,” meaning that the movement of these funds from banks in Singapore or Hong Kong to banks in the U.S. is itself detectable.
Ng said, "They may still be in violation because they have an undisclosed offshore account that is generating income but have not reported it domestically." He added, "Hiding income is not tax planning."
The U.S. Foreign Account Tax Compliance Act (FATCA) requires foreign banks to report information about U.S. clients, but so far, U.S. banks have not made equivalent automatic information transfers to Beijing.
Cris Cao, a partner at Beijing Weiheng Law Firm, also agrees that Beijing still has the authority to tax funds transferred to the U.S., which poses a risk. He said, “Even if they transfer all funds from their CRS-reported accounts into U.S. bank accounts, it will not naturally reduce or eliminate the tax authority’s right to tax or their tax obligations.”
Cao said, "There is a record of the funds being transferred out," and "this alone is sufficient for tax authorities to impose taxation."
More importantly, this window of opportunity may already be closed. While it is relatively easy to move funds between accounts offshore, transferring money out of mainland China is becoming increasingly difficult.
Jingkuan Lin, a private banker at a Singaporean bank, said: “From now on, virtually no significant amount of domestic capital will be able to leave the country.” He believes that offshore banking will further narrow its focus to serving only the existing pool of capital outside China.