Licences cannot resolve prohibitive rules in the client's location
An offshore licence first establishes that a given entity is permitted to carry on specific business in the licensing jurisdiction; it does not equate to global client access. The restrictions in mainland China and whether an entity is licensed offshore are two separate questions: business being lawful in the place of registration does not mean services can be delivered to mainland clients. The wording of the 2026 notice is not limited to exchanges, and it cannot therefore be assumed that payment platforms, merchant collection tools or enterprise-only versions fall outside its scope of review.
A determination cannot be made solely on the basis of identity documents or contractual addresses
A practical review should also examine who actually uses the client account, where the client operates, who issues payment instructions and for whom settlement is ultimately completed. Suppose a mainland trading company opens an account in the name of an affiliated offshore company, but a mainland business team continuously uses that account to arrange exchanges for mainland transactions; in that case, retaining only the offshore registration certificate is insufficient to explain to whom the services are provided. Conversely, a Chinese national genuinely living abroad cannot be treated as a mainland client for the purposes of this question on the basis of nationality alone; it remains necessary to ascertain their location, the substance of the business and any China-related arrangements.
"The client approached us on its own initiative" is likewise not an automatic exception
The 2026 notice does not establish a general exemption for offshore licensed institutions permitting them to provide services merely because a client makes a request on its own initiative. The absence of Chinese-language product materials and of a mainland office does not, on its own, prove that no services are being unlawfully provided into the mainland. Where mainland traffic already exists, website application forms, sales chats, referral commissions and payment records should be reviewed to prevent a situation in which the front office claims not to serve the mainland while the back office still manually approves access.
Existing clients should be handled on the facts, not by changing identity in order to continue
First identify the restricted services and incomplete transactions, and then compliance, legal and operations should jointly determine the path for ceasing new business, communicating with clients and lawfully handling existing assets. Clients must not be asked to use offshore addresses, re-sign with shell companies or change payees in order to continue trading. Whether reporting is required and how frozen funds or refunds should be handled must be confirmed according to the specific account and the status of the matter, so as to avoid simply closing accounts and leaving client assets with no one to deal with them.
Recommended actions
- Sample account-opening, marketing and settlement files, and verify the named client against the actual user.
- Implement the mainland restrictions in product access, manual review and channel management rules.
- Formulate a plan for ceasing new business and winding down existing mainland business, and retain complete records.
Information note: This article provides general information and does not replace legal advice based on specific facts.
References
- Notice on Further Preventing and Addressing Risks Associated with Virtual Currencies and Related Matters (Yin Fa [2026] No. 42) — People's Bank of China and seven other departments
