At the beginning of 2017, Chinese authorities issued an announcement to tight the capital controls of foreign exchange and remittance. After the policy of forbidding residence of China to buy overseas investment insurance through union pay and the policy of tighten the approval of cross-border mergers, now the Chinese government decides to clamp down on the foreign exchange purchases.
To specify, according to the relevant laws and regulations, Chinese individual can convert US$50,000 to foreign currency each year. However, according to the new policy, when converting to the foreign currency, the money exchanger has to fill in an Application on Individual Purchasing Foreign Currency and provide more detailed information on when, where and how the money will be spent.
In addition, there is going to be a stricter examination of high-value cross-boarder transactions, executed by the State Administration of Foreign Exchange (SAFE).Authorities further emphasize that under the current foreign exchange regulations, Chinese individual investors are not allowed to purchase overseas properties, invest in foreign equity markets, and purchase overseas life insurance or other capital items.
Furthermore, according to the Application on Individual Purchasing Foreign Currency, if the money exchanger breaks relevant laws and regulations, he or she will be listed in the “Watch List” and cannot purchase any foreign currency within the next two years. Moreover, he or she will also face a fine equal to 30% of obtaining foreign exchange amount under false pretense plus the fine of less than 50,000 RMB.
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