China’s UnionPay unveils further limits on cards for HK insurance purchases
In what is being seen as a response to the Chinese government’s increasingly forceful efforts to stem the flow of capital out of the country, mainland credit card provider UnionPay has said it plans to tighten up further on the use of its debit and credit cards by its mainland Chinese clients to purchase Hong Kong insurance products.
Such products have been a focus of Beijing officials in recent months as they scrutinise discreet methods of capital movement abroad, such as the purchase of insurance plans, where the intention of the individual in question is considered more ambiguous than, say, the purchase of overseas property.
Those purchasing insurance policies in Hong Kong are also said to be seeking to bypass aUS$50,000 limit Chinese citizens are allowed to move overseas a year.
In a statement on its website on Saturday, UnionPay said that it would ban its mainland Chinese customers from purchasing overseas insurance products other than accident and medical-related policies, in the wake of “a significant increase in overseas insurance transactions by cards issued from mainland China” it had observed in its recent transactions.
In its statement, UnionPay said it was issuing what it’s calling The Compliance Guidelines for Overseas Insurance Merchants Accepting UnionPay Cards Issued in Mainland China, which it said “re-emphasised” certain existing regulations having to do with the use of its mainland China-issued cards.
These, it went on, included a requirement that its mainland customers were “not allowed to buy any insurance product (that) includes investment-related contents” in Hong Kong, although they still could purchase “pure”, or protection insurance, to cover the risks of accidents, death and illness.
In a separate but related development, China’s foreign exchange regulator on Friday told banks to strengthen checks on foreign exchange transactions to make sure they were genuine and based on actual needs, according to the Reuters news agency.
As reported here in February, UnionPay announced then that it would cap overseas insurance product purchases by its mainland Chinese customers at US$5,000, in response to concerns over the use of such purchases to shift money out of China.
In April, the China Insurance Regulatory Commission warned investors that any insurance products sold in Hong Kong will not be protected by mainland Chinese laws. This move was also seen as an effort to discourage the use of Hong Kong life insurance products by those looking to discreetly move capital out of the mainland.
In its statement, the CIRC pointed out that China has much tighter regulation than Hong Kong – similar, it said, to the regulations in force in the UK and Australia – but that these regulations didn’t apply in Hong Kong.