China’s rich turn to U.S. banks as Beijing scrutinizes offshore wealth

SINGAPORE — Wealthy Chinese rattled by Beijing’s widening hunt for overseas wealth are turning to a once-familiar refuge for their money: the U.S. 

Private bankers and lawyers who work with Chinese clients say inquiries about opening U.S. bank accounts have grown in the months after Beijing imposed retroactive taxes on offshore wealth in July, moving assets previously stored in Singapore or Hong Kong there to stay further away from Beijing’s reach. 

“It has become relatively prevalent,” said Keith Tan, CEO of Singapore-based Golden Acacia Capital, who is helping Chinese clients manage their offshore portfolios. His clients began planning exits to the U.S. in July, and some have the accounts set up in less than two months. “The hurdle is not that high for Chinese clients to open American accounts and transfer assets there.” 

Wealthy clients tend to choose large private banks while smaller accounts go to regional banks or online brokers, Tan said.

The rush has gained urgency with China’s new tax regime on offshore trusts. Authorities said in July that income and gains from overseas trusts owned by Chinese tax residents would be taxed at 20%, setting off a scramble for cash and alternative structures. 

Lawyers in Singapore and Hong Kong have been working to tally how much tax their clients owe, facilitating trusts’ unwinding, sales of shares in listed companies or applying for loans to meet the outsized tax bill. 

Meanwhile, the U.S. sits outside the Common Reporting Standard, or CRS, the OECD framework under which more than 100 jurisdictions automatically share financial account data. While banks in Singapore and Hong Kong are supposed to report China-linked accounts to Beijing, American banks have no such obligation. 

Non-resident clients who open foreign bank accounts in the U.S. can also find investment vehicles with reduced or no tax-filing obligations to the Internal Revenue Service, said James Wang, CEO of Blue Brick Consulting Group, a private-client tax advisor. But China’s latest regulations require people classified as Chinese tax residents to self-declare worldwide income to Beijing, Wang said.  

Banks in New York are seizing the opportunity to offer a solution that could shield Chinese customers from their country’s tax man. U.S. banks are straining to keep up with the rise in demand, according to a New York-based wealth-planning advisor who works with Chinese family offices.

“With inquiries surging, some banks have shortened the timeframe for clients to meet required minimum capital commitments” before the accounts are subject to closure, said the advisor, who requested anonymity to speak about bank processes.

Chinese families with offspring holding U.S. green cards have also used foreign grantor…