China’s State Administration of Foreign Exchange has stepped up capital account controls with the launch of new regulations that restrict the amount of money that depositors are permitted to withdraw from their bank accounts while abroad.
Under the new rules which came into effect on Monday the maximum amount of money that individual Chinese citizens can withdraw from overseas ATM’s is set at 100,000 yuan (approximately USD$15,000).
According to SAFE the rules apply irrespective of the number of separate bank accounts or ATM cards that a Chinese citizen possesses and uses to make withdrawals overseas.
SAFE had previously stipulated an annual ATM withdrawal cap of 100,000 yuan per bank card, but did not restrict the use of multiple cards to make withdrawals from a single account, or withdrawals from multiple accounts at multiple banks.
Chinese citizens will still be allowed to hold multiple bank cards, with the cap on daily withdrawals set at 10,000 yuan per card.
SAFE said that the punishment for withdrawals of more than 100,000 yuan from overseas ATM’s by a single individual within a single calendar year would be a ban on moving cash abroad using any mainland Chinese bank card for the remainder of both the current and subsequent years.
According to SAFE the new curbs are a “necessary measure” directed at money laundering, tax evasion and financing for terrorist activities, following the discovery that some Chinese citizens have been withdrawing copious sums of cash using a large number of ATM cards.
“International experience has shown that large cash transactions frequently involve criminal activities including fraud, gambling, money laundering and terrorist financing,” said SAFE in an official statement.
SAFE nonetheless contends that the 100,000 yuan annual cap should accommodate normal demand for cash while abroad, given that around 81% of overseas cash withdrawals conducted via mainland Chinese ATM cards last year totalled approximately 30,000 yuan per card.
The move comes following China’s tightening of capital account controls in 2017, as part of efforts to contain outflows in response to a record-breaking exodus of funds in 2016 that depleted its foreign exchange reserves.
China capital account controls are currently some of the strictest amongst leading economies, with Chinese citizens limited to USD$50,000 in foreign currency conversions per year.