China has further tightened its grip on stemming the outflow of money from the world’s second largest economy by slapping a US$15,000 annual limit on overseas ATM withdrawals.
China is clamping down on overseas ATM withdrawals. Photo credit: iStock
The move announced just 48 hours ago came into effect on New Year’s Day after the details were released by the state-owned news agency Xinhua.
“On Saturday, the foreign exchange regulator toughened the rules on overseas cash withdrawals from personal bank cards to curb money laundering, terrorist financing and tax evasion,” the mouthpiece for Beijing reported.
The aptly-named, State Administration of Foreign Exchange, or SAFE for short, announced the decision when it stated that the total amount of overseas cash withdrawals from domestic bank cards owned by one person would be capped at 100,000 yuan ($15,000) per year.
Restrictions were considered “a necessary measure”, the regulator pointed out. “International experiences have shown that large cash transactions are often associated with criminal activities such as fraud and gambling,” the SAFE statement said.
Photo credit: bing.com
Anyone exceeding the limit will be barred from withdrawing cash overseas for the remainder of the year and the following 12 months, Xinhua added. Still, the move comes after China tightened capital controls last year to stem the outflow of money.
In June, Beijing ordered the banking sector to report every cash withdrawal made overseas and card transaction of more than 1,000 yuan. Under the new regulation put out by the SAFE, banks had to submit a report of overseas transaction information on a daily basis from Sept 2.
China had already increased controls about the use of bank cards in Hong Kong and abroad. In March, China UnionPay barred mainland Chinese customers from using its system to buy property in Hong Kong. Overseas withdrawals were capped at 10,000 yuan per day for cardholders and 100,000 yuan per year.
Photo credit: bing.com
Latest figures from the regulator in 2016 revealed that overseas bank card transactions were more than $120 billion annually.
“In line with the increasing need for global cooperation on anti-money laundering, anti-terrorism financing and addressing tax base erosion, statistics on cross-border bank card transactions need improved transparency and data quality,” the SAFE said at the time.
Squeezing capital outflows has become a priority for the government. Last week, it announced that new QR, or quick response, code payment rules would be rolled out in April.
Chinese smartphone users can pay for an array of online foreign products by scanning a barcode on goods or services.
Among the new regulations will be a limit on platforms such as WeChat Pay and Ant Finance Group’s AliPay, which is part of the Alibaba family.
“Daily limits of 1,000 or 5,000 yuan apply to barcode payers who have not completed certain authentication procedures,” the Financial Times reported.