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on Wednesday, 08 March 2017
in Business in China

China has restricted its overseas transaction regulations

Since the beginning of 2015 the value of the yuan against the dollar has weakened, devaluating more than 6% in 2016. Meanwhile, a large amount of capital left China, which led Bloomberg to 

estimate that China has suffered more than $1.7 trillion in capital outflow since 2015. A big percentage of this outflowing capital was used for overseas real estate investment by individuals and groups, some of which also involved money laundering. To slow down this outflow and combat money laundering the State Administration of Foreign Exchange (SAFE) is introducing restrictive measures that will be implemented from July 1 2017. After the implementation of the new measures, individuals are still allowed to transfer up to 50,000 USD yearly overseas, however the money transferred is not allowed to be used for real estate investment purposes, only for medical or travel services. If individuals want to transfer a higher amount they have to disclose their reasons and wait for regulators to evaluate their case. In addition to this, financial institutions will have to document all transactions, and since January 1 2017, the Bank of Shanghai and China Merchants Bank are required to have their customers complete a form if they want to exchange RMB to foreign currencies through mobile bank apps.

Four main aspects have been adjusted according to the new measures:

1. To introduce a required ‘suspicious transaction report system’ and set up comprehensive transaction monitoring criteria

2. To lower the cash transaction amount that needs to be reported; for cash transactions over 50,000RMB it will be necessary to submit a report, whereas the current required amount is 200,000RMB

3. To introduce regulations and standards for the reporting of large amounts of cross-border transactions

4. To change and adjust the main factors that must be filled out in overseas transaction reports  

Financial institutes in China are requested to report to SAFE when

Amount of overseas & domestic transaction Applied to whom
Financial institutes in China are required to report any overseas and domestic cash transactions over 50,000RMB or 10,000USD Natural and artificial persons
Financial institutes in China are requested to report any overseas and domestic bank transactions over 2 million RMB or 200,000USD Artificial persons
Financial institutes in China are requested to report any domestic bank transactions over 500,000RMB or 100,000USD Natural persons
Financial institutes in China are required to report any overseas bank transactions over 50,000RMB or 10,000USD Natural persons 

Last year, some multinational companies already experienced a delay in overseas money transactions; this previously took 2-3 days and now takes more than one week. Furthermore, companies can only take out of China an amount equal to 30% of their assets in China, unlike before where 100% was permitted.

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