Research Directorate, Immigration and Refugee Board of Canada

1. Regulation

China's Detailed Rules for Implementing the Measures for the Administration on Individual Foreign Exchange, which took effect on 1 February 2007, provides the following:

Article 2 The administration of total annual amount shall be adopted for personal settlement and domestic personal purchase of foreign exchange. The total annual amount shall be the value equivalent to [US$]50,000 Dollars for each person every year. The State Administration of Foreign Exchange [(SAFE)] may make adjustment on the total annual amount in light of the position of payment balance.

With regard to the personal settlement and purchase of foreign exchange, in case it is within the total annual amount, it shall be handled at a bank by presenting his/her valid identity certificate;

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Article 4 As regard personal purchase or settlement of foreign exchange within the total annual amount, he/she may entrust his/her linear relative to handle on his/her behalf;

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Article 6 Appointed foreign exchange banks (hereinafter referred to as bank) shall check and verify the authenticity of personal foreign exchange business under the provisions of the present Detailed Rules, and may not forge or alter any transaction.

A bank shall, through the [P]ersonal [F]oreign [E]xchange [S]ale and [S]ettlement [M]anagement [I]nformation [S]ystem (hereinafter referred to as [P]ersonal [F]oreign [E]xchange [S]ale and [S]ettlement [S]ystem), handle the business of personal purchase or settlement of foreign exchange and record the related information in an authentic, accurate and integrated way.

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Article 30 In case the total amount of foreign currency banknotes withdrawn by an individual does not exceed the amount equivalent to USD [$]10, 000 (including USD [$]10, 000), he/she may handle it directly at a bank; if the total amount is more than the aforesaid amount, he/she shall report it to the local [SAFE branch] [1] for record in advance by presenting his/her valid identity certificate and the evidential materials regarding the withdrawn purpose. The bank shall, upon the strength of his/her valid identity certificate and the Filing Form for the Withdrawal of Foreign Currency Banknotes … , handle the formalities for withdrawing foreign currency banknotes for the individual.

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Article 35 All the businesses of personal foreign exchange sale and settlement handled by a bank shall be incorporated into the [P]ersonal [F]oreign [E]xchange [S]ale and [S]ettlement [S]ystem except under the following circumstances:

1. the foreign exchange sale and settlement happens at foreign currency exchange outlets;
2. the foreign exchange settlement is handled through bank counters and the amount thereof is less than that equivalent to USD[$]100 (including USD[$]100), including foreign exchange settlement of tail series and foreign exchange settlement of transferring interest, etc;
3. the foreign exchange settlement for domestic consumption is handled through foreign currency cards:
4. RMB banknotes is withdrawn at self-service banks with overseas cards; or
5. domestic cards are used overseas and repaid by purchasing foreign exchange overseas.

Article 36 When handling foreign exchange sale and settlement business for an individual, a bank shall follow the following process:

1. to inquire about the situation of foreign exchange sale and settlement of this individual through the [P]ersonal [F]oreign [E]xchange [S]ale and [S]ettlement [S]ystem;
2. to check and verify the evidential materials presented by this individual;
3. to record the business data on foreign exchange sale and settlement into the [P]ersonal [F]oreign [E]xchange [S]ale and [S]ettlement [S]ystem sum by sum; and
4. to print the Letter of Notice on Foreign Exchange Settlement/Purchase through the [P]ersonal [F]oreign [E]xchange [S]ale and [S]ettlement [S]ystem and maintain it as accounting voucher for future reference. (China [2007], bold in original)

2. Limits on Foreign Currency Exchanges

Sources report that each Chinese citizen is permitted to exchange up to US$50,000 in foreign currency annually inside China (ICBC n.d.; BOC n.d.; China [2007], Art. 2). According to information available on the Bank of China (BOC) website, "the annual total amount should not be used [a]cross a calendar year, and the amount unused or remaining must not be transferred to the next year for use" (BOC n.d.). BOC provides the following information regarding foreign currency purchase procedures:

When the individual withdrawal of foreign currency cash is accumulatively equal to or less than US[$]10,000 for one day, the business can be directly transacted in Bank of China[.] When the withdrawal amount exceeds [US$10,000], customers should report to [a] local foreign exchange office with [a] personal identity document and the withdrawal purpose materials. Bank of China will transact the individual withdrawal business on receiving [the] relevant certificate issued by the foreign exchange office. (BOC n.d.)

According to Industrial and Commercial Bank of China (ICBC), customers can withdraw US$10,000 in cash at the time of a foreign currency purchase, and the "rest can be deposited in personal foreign exchange accounts or be used for payment or credited to international cards" (ICBC n.d.). China Construction Bank (CCB), however, indicates that customers purchasing foreign currency may not withdraw more than US$5,000 in cash (CCB n.d.).

Regarding foreign exchange for trips abroad, CCB reports that customers can purchase [US]$5,000 per trip if the departure date on their visa is "within six months," and [US]$8,000 if the visa departure date is six months or more away (CCB n.d.). The same source states that customers making "tourist trips to a neighboring country through a Chinese port of entry" can purchase US$100 per person per day, up to a maximum of US$500 per trip (CCB n.d.).

According to a May 2019 report by South China Morning Post (SCMP), a Hong Kong-based daily newspaper, "previously, any withdrawals of US$5,000 or more in a single transaction required proof of need, such as an airline ticket for overseas travel or a health certificate for overseas medical care," but that in late 2018 this "'scrutiny benchmark'" was "quietly lowered to US$3,000" following "instructions from the People's Bank of China (PBOC), the country's central bank," according to unnamed bankers (SCMP 3 May 2019). Corroborating information could not be found among the sources consulted by the Research Directorate within the time constraints of this Response.

2.1 Foreign Exchange Purchases Above the Annual Limit

According to sources, Chinese citizens with proof of "need" (BOC n.d.) or "[d]emand" (ICBC n.d.) can request to purchase foreign currency above what the annual limit permits for one of the following reasons:

• costs of overseas study
• overseas medical treatment
• "overseas training"
• overseas international organization membership fees
• assistance to direct relatives abroad
• "overseas mail" ["order" (BOC n.d.)]
• foreign consultancy (BOC n.d.; ICBC n.d.)
• "other fees for service and trade," "trade in goods and other related fees," or "overseas spending or expenses without credit cards" (ICBC n.d.).

CCB indicates that customers "[p]urchasing foreign exchange for foreign education" who can provide an "official statement of tuition and living expenses" can "purchase the full amount listed in the statement" as long as it is less than US$20,000 "equivalent" per year; any amounts exceeding US$20,000 will be "subject to approval" by SAFE (CCB n.d.). The same source adds that if the client is unable to provide an "official statement of tuition and living expenses, and his or her visa indicates a departure date within six months, he or she may purchase the equivalent" of US$5,000; if the visa departure date is six months or more away, the client may purchase an "equivalent" of US$8,000 "per study trip" (CCB n.d.). CCB indicates that customers purchasing "foreign exchange to pay fees for membership in an international organization, assist family abroad, and shop by mail" can purchase up to US$5,000 "per person per time" (CCB n.d.).

3. Methods of Foreign Exchange Transactions

BOC indicates that it exchanges 17 currencies, although BOC "outlets" in "various regions" determine which "specific currencies" they offer (BOC n.d.). ICBC indicates that it "offers foreign exchange services" in several currencies including the US dollar, while noting that available currencies "vary from one branch to another" (ICBC n.d.). BOC states that "[o]utlets of individual foreign exchange purchasing … can be found nationwide" (BOC n.d.). ICBC reports that foreign currency can be purchased "through designated ICBC outlets" or "in small amount[s] through ICBC Internet banking or mobile banking" (ICBC n.d.).

In a January 2020 circular issued by SAFE regarding foreign exchange during COVID19, SAFE instructed banks to "keep a keen eye on individuals' demand for foreign exchange and encourage them to go through individual foreign exchange transactions via online channels like mobile banking" (China 27 Jan. 2020).

4. Procedures

BOC reports that "[i]f the foreign exchange … is within the total [annual allotted] amount," the transaction can proceed once the customer "declar[es] the usage" of the foreign currency and presents one of the following "true identity documents": "personal ID card (Chinese citizen[s]), Hukou book (Chinese citizen[s] under [the] age of 16), military ID card ([members of the] Chinese People's Liberation Army), [or] armed police ID card ([members of the] Chinese People's Armed Police)" (BOC n.d.). ICBC states that customers can obtain foreign currencies "by providing [a] valid ID document and filling [out] the Application for Purchase of Foreign Exchange" so long as they are within their US$50,000 yearly allowance (ICBC n.d.). Without providing further detail, the May 2019 SCMP article indicated that while SAFE rules "stipulate that for a deposit or withdrawal of foreign currency above the equivalent of US$10,000, banks shall ask to see ID, check it and record all the relevant documents[,] … in practise, the procedures are much more complicated" (SCMP 3 May 2019). Corroborating information could not be found among the sources consulted by the Research Directorate within the time constraints of this Response.

Sources report that in cases where an individual cannot apply to purchase their foreign currency themselves, the purchase can be made by "another person" (ICBC n.d.) or a "direct relative" (BOC n.d.). ICBC states that "the customer shall provide valid ID documents of both the principal and the entrusted person, proof of direct relation and [a] certificate of entrustment" (ICBC n.d.). According to BOC, the "direct relative … must submit the power of attorney of the consignor, the true identity document of the proxy and the certificate of relative relationship" (BOC n.d.).

ICBC states that following "verification" by ICBC, customers seeking to purchase foreign currency above the annual limit "can buy foreign exchange according to particular demand without any restrictions on amount" (ICBC n.d.). CCB reports that customers who "need to purchase a greater amount of foreign exchange" than the annual limit must submit the required documents to their local SAFE branch and, once approved by SAFE, may purchase the foreign currency at CCB "with the SAFE’s statement of approval and other required documentation" (CCB n.d.).

5. Monitoring by Authorities

According to a 2015 circular issued by SAFE, China's [translation] "Monitoring System for Personal Foreign Exchange Transactions" was to be launched on 1 January 2016 and would replace the Personal Foreign Exchange Sale and Settlement Management Information System (China 25 Dec. 2015). The same source states that a [translation] "bank that is qualified to handle transactions for the sale and settlement of foreign currency … shall process foreign exchange transactions for individuals … through the Monitoring System for Personal Foreign Exchange Transactions" and "will promptly submit accurate and complete reports containing the information and data related to these transactions" (China 25 Dec. 2015). The SAFE circular provides the following information regarding monitoring compliance with foreign exchange regulations including the individual annual limit:

[translation]

When individuals are processing foreign exchange transactions, they shall comply with the relevant regulations concerning the administration of foreign exchange for individuals. They must not use any methods, such as split [transactions], to evade limit restrictions and valid administrative processes. [SAFE] and its branch offices … shall place individuals who evade limit restrictions and valid administrative processes on a watch list.

1. For individuals who lend their quota to assist other persons to evade limit restrictions and valid administrative processes, SAFE shall coordinate with the bank to issue a risk warning to these individuals by using a Letter of Risk Warning Concerning Personal Foreign Exchange Transactions … . If the aforementioned individuals once again lend their quota to assist other persons to evade limit restrictions and valid administrative processes, SAFE shall place these individuals on a watch list.
2. For individuals who evade limit restrictions and valid administrative processes by borrowing quota from others or by using other methods, SAFE shall place these individuals on a watch list and coordinate with the bank to notify these individuals by using a Notice of Inclusion to the Watch List for Personal Foreign Exchange Transactions … .
3. The duration for individuals for being placed on a watch list shall include the year that they were placed on the watch list followed by two consecutive years thereafter. During this period, when individuals on the watch list conduct personal sale and settlement transactions for foreign currency, they shall conduct their transactions at the bank with their valid personal identity documents and relevant supporting documents that indicate their transaction limits. The bank shall thoroughly review the relevant supporting documents in accordance with the principles of conducting valid examinations and verifications. (China 25 Dec. 2015)

According to CCB's website, the CCB system "is interconnected with the system of foreign exchange administration to examine the qualification of Chinese residents for purchase foreign exchange" (CCB n.d.).

In an article published on ICLG.com [2], King & Wood Mallesons (KWM), an international law firm that advises on Asian markets (KWM n.d.), states regarding the reporting of "large" cash transactions that an "[Anti-Money Laundering] Reporting Entity shall report if the value of a single transaction or the accumulated value of all transactions within a day" is greater than 50,000 renminbi [RMB], US$10,000 or "equivalent" (KWM 25 May 2021).

A December 2019 CNN article reports that SAFE "fined" BOC "nearly [US]$6,000 for breaking a government rule limiting how much foreign currency people can take out of their accounts within a short period of time," after a customer withdrew US$50,000 in cash within one week (CNN 19 Dec. 2019). The 2019 SCMP article reports that, according to an anonymous bank official, Chinese banks were also "required to keep a 'watch list' monitoring clients who made frequent foreign exchange withdrawals" (SCMP 3 May 2019). The same article cites the story of a woman who had been "placed on a 'watch list' of customers making frequent [foreign currency] withdrawals," after making six withdrawals totalling US$49,800 over eight months from her "dollar-denominated account" at a Chinese bank (SCMP 3 May 2019). The same source adds that the woman was "not allowed to withdraw US$200 … even though she was within her quota" unless she converted it into Chinese currency (SCMP 3 May 2019). Corroborating information could not be found among the sources consulted by the Research Directorate within the time constraints of this Response.

This Response was prepared after researching publicly accessible information currently available to the Research Directorate within time constraints. This Response is not, and does not purport to be, conclusive as to the merit of any particular claim for refugee protection. Please find below the list of sources consulted in researching this Information Request.

Notes

[1] According to its official website, State Administration of Foreign Exchange (SAFE) has "branches (administrative offices) in various provinces, autonomous regions, and municipalities directly under the Central Government, as well as in some cities with sub-provincial status" (China n.d.). The same source adds that SAFE also has "established central sub-branches in some prefectural-level cities" and "counties" (China n.d.). In total, SAFE reports that its network includes 310 total "central sub-branches" and 517 "sub-branches" nationwide (China n.d.).

[2] ICLG.com is a "global platform for legal reference, analysis and news" run by Global Legal Group (GLG), an "independent, London-based media company" (ICLG.com n.d.).

References

Bank of China (BOC). N.d. "Individual Foreign Exchange Purchasing." [Accessed 20 Oct. 2021]

China. 27 January 2020. State Administration of Foreign Exchange (SAFE). "Circular of the State Administration of Foreign Exchange on Offering Convenient Foreign Exchange Policy to Support the Prevention and Control of the NCP Epidemic." [Accessed 1 Oct. 2021]

China. 25 December 2015. State Administration of Foreign Exchange (SAFE). "国家外汇管理局关于进一步完善个人外汇管理有关问题的通知" (Notice from the State Administration of Foreign Exchange on Further Improving the [Means to Resolve] Issues Relating to the Administration of Foreign Exchange for Individuals). Excerpts translated by the Translation Bureau, Public Services and Procurement Canada. [Accessed 12 Oct. 2021]

China. [2007]. "Detailed Rules for Implementing the Measures for the Administration on Individual Foreign Exchange." [Accessed 20 Oct. 2021]

China. N.d. State Administration of Foreign Exchange (SAFE). "Branch Network." [Accessed 28 Oct. 2021]

Cable News Network (CNN). 19 December 2019. Laura He. "Money Has Been Leaving China at a Record Rate. Beijing Is Battling to Stem the Tide." [Accessed 20 Oct. 2021]

China Construction Bank (CCB). N.d. "Personal Purchase of Foreign Exchange." [18 Oct. 2021]

ICLG.com. N.d. "About ICLG." [Accessed 20 Oct. 2021]

Industrial and Commercial Bank of China (ICBC). N.d. "Buy FX (Personal)." [Accessed 20 Oct. 2021]

King & Wood Mallesons (KWM). 25 May 2021. Stanley Zhou, et al. "China: Anti-Money Laundering Laws and Regulations 2021." ICLG.com. [Accessed 20 Oct. 2021]

King & Wood Mallesons (KWM). N.d. "About Us." [Accessed 16 Nov. 2021]

South China Morning Post (SCMP). 3 May 2019. Xie Yu. "Chinese Banks Quietly Lower Daily Limit on Foreign Currency Cash Withdrawals." [Accessed 20 Oct. 2021]

Additional Sources Consulted

Oral sources: Baker McKenzie; Bank of China; Bank of Montreal; China – State Administration of Foreign Exchange; China Construction Bank; China Forex; Chinese law firms specializing in banking and finance (10); Easy Exchange; Fitch Ratings; GoodWill Business Management Agent; I Can Vision; Industrial and Commercial Bank of China; ING; International Monetary Fund; Organisation for Economic Co-operation and Development.

Internet sites, including: Baker McKenzie; Bank of Montreal; Barclays; Bloomberg; Canada – Foreign Exchange Controls in China; China – General Administration of Customs, People's Bank of China, State Administration of Foreign Exchange; China Forex; Easy Exchange; ecoi.net; Factiva; Garrigues; Hong Kong and Shanghai Banking Corporation; I Can Vision; ING; JPMorgan Chase & Co.; New Horizons; Organisation for Economic Co-operation and Development; Reuters; Royal Bank of Canada; Santander.