Effective January 1, 2018, a new regulation has been officially implemented in China:
Individuals are limited to a maximum annual overseas cash withdrawal of 100,000 RMB equivalent per person using domestic bank cards. If this annual quota is exceeded, the individual will be suspended from making overseas cash withdrawals with domestic bank cards for the remainder of the current year and the following year. The daily withdrawal limit for both RMB and foreign currency cards remains unified at 10,000 RMB equivalent per card.
Since 2003, the State Administration of Foreign Exchange (SAFE) of China has implemented quota management for overseas cash withdrawals using bank cards. Previously, in accordance with regulations effective from October 1, 2015, the cumulative limit was 100,000 RMB per card per year.
1. Why the tightening?
"Setting the annual overseas cash withdrawal limit at 100,000 RMB per person is essentially acting as a safety valve."
Yan Lixin, Executive Director of the China Anti-Money Laundering Research Center, pointed out that illegal foreign exchange trading and cross-border exchange are common tactics for money laundering. With the increasing popularity and convenience of non-cash payments abroad, and global efforts to strengthen the management of large overseas cash withdrawals, large-scale personal cash withdrawals abroad are not the norm and are easily associated with illegal activities such as fraud, money laundering, and terrorist financing.
A relevant official from SAFE stated that regulating large-scale overseas cash withdrawals via bank cards is a necessary measure for "anti-money laundering, anti-terrorist financing, and anti-tax evasion" efforts, which can further prevent illegal and criminal activities in the field of bank card cash withdrawals.
2. What is the impact?
Overseas business travel, cross-border online shopping, and international education have become a new trend in consumption for Chinese citizens in recent years.
The aforementioned official told reporters that improving the management of large-scale overseas cash withdrawals via bank cards will have no impact on normal transactions.
First, it does not affect normal cash withdrawals by the general public. According to statistics, in 2016, 81% of overseas bank card cash withdrawals were below the equivalent of 30,000 RMB. The new annual limit of 100,000 RMB per person effectively curbs large-scale withdrawals by a small number of individuals violating regulations, while fully meeting the normal cash withdrawal needs of cardholders abroad.
If an individual has a genuine and compliant need for large amounts of cash abroad, they may handle it in accordance with the "Administrative Measures for Individual Foreign Exchange" and its implementation rules, such as purchasing foreign exchange legally and carrying foreign currency cash abroad.
Second, it does not affect the convenience of personal card usage and foreign exchange. This new regulation is not a major policy adjustment; it does not change the basic framework of bank card foreign exchange management or personal foreign exchange policies. Normal overseas cash withdrawals and consumption by individuals remain unaffected.
Third, it does not change the convertibility of the current account. According to the relevant regulations of the International Monetary Fund, strengthening cash management does not involve changing the principle of current account convertibility, nor does it fall under the category of capital controls.
A credit card professional from a bank told reporters: "Due to the relatively complete card usage environment abroad, 99% of current overseas credit card consumption is completed through card payments. Credit card cash withdrawals are only used in cases where there are no payment terminals or in emergencies."
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