The China Insurance Regulatory Commission (CIRC
) has said that it will continue to crack down on illegal sales of insurance products from Hong Kong by mainland agencies, linking these activities to capital outflows and money laundering.
The agency has already cancelled the permit of one agency and shut down 35 websites selling unauthorised insurance products, it said in a statement released on Friday. It promised a “zero tolerance” policy on illegal sales.
According to the CIRC, these activities have “distorted the order of the domestic insurance market” and “disturbed the government's foreign currency management and led to asset outflows and even money laundering.”
Mainland Chinese financial regulators have taken drastic steps to stop the illegal outflow of funds since last year, reports Reuters. There has been significant concern that purchasing insurance products abroad has become a method for some Chinese investors to move their money outside of mainland China, avoiding financial restrictions.
Despite limitations being imposed, Hong Kong’s life insurance market grew strongly at 41.5% for 2016, with a large amount of funds coming from customers in the mainland.
The Hong Kong Insurance Authority, the special administrative region’s new regulator, said that it expects demand for Hong Kong insurance products from the mainland to remain strong, given the higher quality of Hong Kong’s products and in spite of government restrictions.
New insurance watchdog to focus on cross-border regulation
Chinese insurers have trouble matching premiums and investments, says PwC
China’s regulator to conduct inspections to weed out violators