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«The situation in China is very much like the situation in America about 15 years ago when a number of the largest Swiss banks  got into all sorts of difficulties in relation to manging the assets of U.S. nationals,» he said.

In the U.S. probe, prosecutors went after tax evaders, including by detaining their Swiss bankers. The probe mushroomed from UBS into one of Switzerland’s entire banking industry, which eventually paid billions to U.S. officials to settle or avoid criminal charges.

China's Government Unhappy

The entertainment industry is perhaps an easy target – Fan Bingbing is not the first star to have fallen into the tax evasion trap (Jackie Chan turned up in the Panama Papers as a client of Mossack Fonseca). For its part, China’s government is said to be unhappy about what it views as the undermining of its influence and values by consumeristic behavior adopted from western media.

The Fan Bingbing scandal comes as China liberalizes its domestic market and foreign banks rush in. UBS in particular has made a big bet on China under CEO Sergio Ermotti, who said two years ago he wanted to double his headcount in the country by 2020.

UBS is looking for private bankers and asset management staff – two areas where everyone including the bank is new to the Chinese market.

Special Service for the Wealthy

Like most major private banks, UBS is hoping to steal a march on Chinese wealth competitors, most of whom are also mass market retail banks (the bank partners with one of the largest, China Merchant).

Major wealth managers argue they can deliver a special service for the wealthy – something Chinese retail banks are hard-pressed to claim. To be sure, banks in China are moving with the wider transparency tide: the country begun data-swapping last month under the so-called Common Reporting Standard.

Never Disclosed

«Because of the common reporting standard, banks in China need to pay more attention to due diligence procedures to identify the account holders and origin of the money,» Deloitte’s Yu said.

UBS’ China bet is a long-term one, and the bank has never disclosed how much it manages onshore. According to UBS insiders, it has grown in recent years to a considerable size. The Swiss-based firm also posseses a valuable brand – «UBS» translates simply to «Swiss bank» in China. Whether the vagaries of Chinese tax politics will make UBS’ efforts worthwhile remains to be seen.

People Most at Risk

«The people most at risk, as we have just seen from the Interpol situation are in fact the Chinese employees, not the international ones. The government has leverage here,» Dovey said.