(Yicai) Sept. 10 -- Interactive Brokers Group, the world’s largest online brokerage, has tightened its securities account opening rules for Chinese mainland residents as China cracks down on tax avoidance on offshore investments.

IBKR has toughened the application process for Chinese mainlanders since last month, and its app has been removed from app stores in China. To open an account, new clients must provide a mainland identification document and proof of overseas residency or employment from the previous three months, according to the US company’s website.

The move comes as China’s tax authorities crank up enforcement of taxation on individuals’ overseas income, prompting some mainland investors to turn to US brokerages such as IBKR to try to avoid sharing Common Reporting Standard information.

The US is not part of the CRS, a global framework for the automatic exchange of financial account information among participating jurisdictions, but operates under its own Foreign Account Tax Compliance Act. Some believe this offers a loophole for Chinese mainlanders to avoid scrutiny of their offshore investments by Chinese regulators.

Headquartered in Greenwich, Connecticut, IBKR enables clients from more than 200 countries to trade stocks, options, futures, and other assets across 150 global markets.

IBKR is not the first brokerage to bring out new policies to meet Chinese rules. Singapore’s Longbridge Securities said on June 13 that it would suspend account openings for Chinese mainlanders who cannot provide proof of overseas residency.

Hong Kong-based Futu Holdings and Beijing-based UP Fintech Holding, known in Asia as Tiger Brokers, halted mainland account services in 2022. The following year, the pair was forced by China’s securities watchdog to pull their apps from mainland app stores for providing mainlanders with cross-border brokerage services without permits.

Editor: Futura Costaglione