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December 31, 2016

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Home » Business » Finance

Tighter checks on cross-border money deals

By Feng Jianmin | December 31, 2016, Saturday | Print Edition

CHINA will tighten inspection on Chinese residents’ cross-border money transactions in a new measure to manage large-sum money deals.

Financial institutions should report to authorities if an individual makes cross-border money transactions larger than 200,000 yuan (US$28,810) daily, the People’s Bank of China said in a statement yesterday, announcing updated rules on the management of large-sum money transactions and suspicious deals.

The new rules will be effective on July 1 for all financial institutions dealing with business including banking, securities and trust. Insurance firms, consumer-finance companies and lending firms are newly covered by the rules.

The new measure comes as authorities feel the need to monitor yuan deals more closely as the public can access increased cross-border investment channels, including the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect programs.

“Yuan deals by domestic residents will be more frequent with the gradual opening-up of onshore individual cross-border business,” the statement said. “To design a specialized yuan report standard will enable regulators to master cross-border yuan transaction data and conduct risk monitoring.”

The old criteria of having to file reports if an individual makes cross-border transactions of foreign exchange equivalent to more than US$10,000 daily is kept in the updated rules.

Concerning cash deals, including cash deposits, withdrawals and currency conversions, the daily threshold on large-sum deals was cut to 50,000 yuan from 200,000 yuan.

Financial institutions should file reports if individuals and corporate clients make cash deals larger than 50,000 yuan or US$10,000, according to the new standard.

Individuals using cash to buy 50,000 yuan or more worth of US dollars from banks in a day will be reported to the regulators, the statement said.

The new standard meets international practices against money laundering, it said.

“Enhancing cash management is also to prevent the risks of illegal activities such as corruption, tax evasion and dodging foreign currency controls,” it said.

The central bank said it will analyze the reports, coordinate with other departments, work with international agencies and hand evidence over to law enforcement departments to prevent money laundering and protect financial stability.

The changes are made as China faces capital outflow pressure from a strengthening United States dollar.

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