How China's millionares wire money around regulations
Staff Reporter
2015-03-17
Renminbi and US dollars at a bank in Taiyuan, Shanxi, Jan. 26.
Some wealthy Chinese have transferred large amounts of cash abroad to invest in assets with the appreciating dollar, reports Sohu's news portal.
The central parity rate of the renminbi against the US dollar stood at 6.1543 on March 2, down 30 basis points from the previous day and the lowest since Nov. 10. Some rich individuals in China who believe the yuan will continue to go down have gradually transferred money abroad into more valuable investments. But China's financial regulations limiting currency exchanges per person to US$50,000 a year has driven people to seek alternative, sometimes illegal, means to transfer cash overseas.
According to the State Administration of Foreign Exchange (SAFE), there are several ways that people in China can wire large amounts of money abroad. There are illegal private banks that can complete the transaction within an hour. Casinos in Macau are another option. Some withdraw cash or use pawn shops overseas to legally hold the cash.
Money laundering is more efficient but more costly as the risks are high. The handling fee can be as much as 1.5% of the total transferred in some cases, said the report.
Some forge fake receipts that fabricate expenses for false services. SAFE cited one Chinese company that paid US$1 million to a foreign company for a milling machine that cost half the price and was able to allocate the surplus funds elsewhere.
Some take a safer but rather painstaking route by which a person calls on friends and family to max out their personal foreign exchange quota and wire the money through their respective accounts to the subject's account overseas. There are also agents who provide similar services with nominee accounts.
