* Insurance regulator started crackdown since end-2016
* Illegal sales distort market order, disturb FX management
* Says has "zero tolerance" for illegal sales of HK products (Adds details, context)
BEIJING, June 16 (Reuters) - China's insurance regulator will continue to crack down on illegal sales of Hong Kong insurance products by mainland agencies, which it says has led to capital outflows and money laundering.
The China Insurance Regulatory Commission (CIRC) withdrew one agency's permit and shut down 35 websites or public accounts on WeChat - a leading instant messaging platform - during a targeted investigation launched last year that was aimed at those products, the regulator said in a statement on Friday.
CIRC said that those activities have not only "distorted the order of the domestic insurance market" but also "disturbed the government's foreign currency management and led to asset outflows and even money laundering."
The regulator said in a statement posted on its website it would have "zero tolerance" for the illegal sales of Hong Kong products, but did not provide details about the activities.
Chinese regulators, which have taken severe measures to halt the illegal outflows of funds since last year, are concerned that the purchase of overseas insurance products has become a channel for mainland Chinese to move money abroad, avoiding capital restrictions.
The Hong Kong life insurance market has seen very strong demand from mainland Chinese in the past year, despite some curbs imposed on purchases of insurance by Chinese visitors to the city.
Most recently, China's biggest bank card provider UnionPay said it would tighten regulations over how mainland customers can use its debit and credit cards to purchase Hong Kong insurance products, potentially restricting another gateway for capital flight.
Hong Kong's life insurance market saw strong new business growth of 41.5 percent in 2016, with a significant portion of business coming from mainland Chinese customers, Standard & Poor's said.
Hong Kong life premiums are expected to grow at a slower rate of 10 percent over the next two years, S&P said, mainly due to curbs on using UnionPay cards for cross-border insurance-related purchases.
Hong Kong's new insurance regulator told Reuters late last year it saw Chinese demand for Hong Kong insurance products staying strong because of their high quality despite recent curbs on such purchases. (Reporting by Beijing Monitoring Desk, Josephine Mason, and Sumeet Chatterjee in Hong Kong; Writing by Shu Zhang; Editing by Jacqueline Wong)