The era of Xi Jinping, China’s President, continues to be tough on anyone not following the Communist party line. Now it is cracking down on corruption and money laundering and therefore wants the Chinese to know that anyone trying to hide money from state authorities will be severely punished. With its latest move, it is underscoring this policy.
Officially explained as an effort to curtail money laundering, terrorist financing and tax evasion, the Chinese state told its citizens that as from 1 January 2018, the maximum withdrawal per year that any citizen can make overseas with a Chinese bank card is 100,000 yuan ($15,370) per year. And of course, Chinese banks are obliged to report the account holder’s names and the amounts on those accounts.
Continuing to discourage capital outflows towards Europe or the US, the State Administration of Foreign Exchange (SAFE) said individuals who exceed this annual quota would face suspension from overseas transactions for the remainder of the year and an additional year. In other words, if you’re a Chinese man looking to launder money offshore, you are no longer allowed to do so via a Chinese bank card.
The SAFE statement said: “International experiences have shown that large cash transactions are often associated with criminal activities such as fraud, gambling, money laundering and terrorism financing.”
“People should not borrow other people’s bank cards or lend them to others to help get around the regulation.”
In this manner, China’s capital controls will become the most restrictive of the world’s major economies.
According to the Chinese Finance Ministry statistics show that 81 percent of the overseas cash withdrawals totalled some 30,000 yuan per card, and that therefore the cap of 100,000 yuan would “both meet demand for normal cash withdrawals abroad and contain the large sums made by a few lawbreakers.”