Large transfers tend to draw the curiosity and attention of authorities in the tax, law, and public security sectors. This is especially seen in China, a country with a stringent system on inspections of money transfers. But of course, the authorities aren’t bored to the point where they spend their time checking every single transaction. Regardless, it’s important to know what transactions are considered “large” and suspicious so you may avoid triggering an investigation into your bank account.
What is a "large money" transfer?
According to a financial report that was released on July 1, 2017 titled Measures for The Management of Huge Amount Transaction and Suspicious Transaction of Financial Institutions, the following amounts are considered huge in China.
1. Single or cumulative transactions of not less than RMB 50,000 and foreign currency equivalent of not less than USD 10,000 on the same day. Those include cash deposits, cash withdrawals, cash settlements, cash exchange, cash remittances, cash bill settlements, and any other forms of cash receipts and payments.
2. Transactions for non-natural person's bank accounts and other bank accounts on a single or cumulative amount of not less than RMB 2 million, or foreign currency equivalents of not less than USD 200,000.
3. Domestic transactions for natural person's bank accounts and other bank accounts on a single or cumulative transaction amount of not less than RMB 500,000, or the foreign currency equivalent of not less than USD 100,000.
4. Cross-border transactions for natural bank accounts and other bank accounts on a single or a cumulative transaction of not less than RMB 200,000 and foreign currency equivalent of not less than USD 10,000.
Which transfers are considered suspicious?
Either of the following conditions is considered a suspicious transaction:
By dividing the money into certain parts and sending it out in single small amounts frequently, the intention becomes fairly suspicious.
If the frequency and amount of transfers received and paid are inconsistent with the scale of business operations. If you own a small company that sells daily necessities, it's unreasonable to have tens of millions of RMB on your bank statement.
If the business scopes of the recipient and the sender are inconsistent. For example, if you own and operate a catering business and receive a large amount of money from a steel company every day, and then transfer those amounts to, say, an entertainment company, which business scope is entertainment, your transactions become highly suspicious.
If the money is frequently collected and received between the same people in a short period of time. For instance, you transfer RMB 1 million to Peter today, and another RMB 2 million to him tomorrow. After two days, he immediately transfers you RMB 5 million, such transactions beg the question: what's the intention behind that?
Large transfers show on a bank account that has been deactivated for a long time. If the company has stopped its operation and is no longer in business, how can it possibly continue to receive money transfers from other entities?
Saving a large amount of cash at the bank and frequently transferring to another account becomes suspicious, especially if the amount is inconsistent with their ordinary cash receipts and payments.
Opening and canceling bank accounts too often, and a large amount of money has been withdrawn before canceling the account.
Please pay close attention:
The Chinese government's strong investigations on money transfer are partially due to the increasing frequency of tax evasions for certain groups. This document aims to regulate the system for companies paying tax, as many companies are trying to use personal bank accounts to evade it.
According to the government's tax inspection in 2018, they not only check the business bank account, but they also check the personal bank account of the legal representative, the management, and the key persons of the company. Those who are caught evading tax are required to pay a large number of overdue financial penalties. If the amount leads to serious violations, people involved in tax evasion shall shoulder up criminal responsibility as well.
So, knowing what will lead to an investigation into your bank accounts is important. Think twice before your next move.