Chinese mainland officials who stash ill-gotten wealth in Hong Kong will face fresh scrutiny over their financial affairs under a planned tightening of money laundering regulations in the territory.

The Hong Kong government has proposed changes to the requirements on financial institutions and advisers that would introduce checks on the bank accounts and transactions of politically connected people from mainland China.

Businesses in Hong Kong currently only need to apply stricter money laundering checks on politically exposed persons (PEPs) “outside of the People’s Republic of China”. But Hong Kong’s Joint Financial Intelligence Unit, the money laundering watchdog, has proposed amending the rules to apply to everyone outside of the territory.

“The amendment will make it crystal clear to banks, lawyers, accountants and others in Hong Kong that the enhanced due diligence requirements that apply to foreign PEPs must also be applied to PEPs from China,” said Alan Linning, a partner at law firm Mayer Brown. “Banks and law firms will have to treat all PEPs from China on their clients’ lists as high-risk customers.”

The Chinese government has long been concerned about illicit capital outflows and has indicated it is keen to curb officials and other individuals using Hong Kong and other jurisdictions to hide their wealth.

President Xi Jinping has said that tackling corruption is a hallmark of his leadership, vowing to catch both “tigers and flies” — meaning senior leaders as well as lower-ranking bureaucrats.

The effort has been extended to monitor Chinese officials in Hong Kong and the territory’s own leaders. Xi recently appointed an anti-corruption tsar to Hong Kong, Shi Kehui, who will scrutinise the affairs of local officials.

The Hong Kong government closed consultations with the financial and legal services industries on the proposed money laundering changes at the end of last month.

The plans will bring the territory in line with recommendations made by the Financial Action Task Force, a global body that co-ordinates policy on dirty money.

In a review of Hong Kong’s money laundering controls in 2019, the FATF criticised the city’s compliance with standards to prevent the risk of breaches by PEPs and ordered it to “close the technical gap” in relation to the rules for PEPs from China.

The changes will make it harder for any individual connected to the Chinese Communist party to move money into or around Hong Kong without checks on their identity, their public functions, associates and close family.

PEPs are considered as presenting a higher risk of potential money laundering breaches because they are exposed to more opportunities to accept bribes or participate in corruption.