In recent years, with the gradual tightening of foreign exchange control by China`s government, the behavior of Chinese enterprises and individuals to go to sea has become more and more difficult.
In fact, according to statistics in the recent communiqu é of the China Administration of Foreign Exchange, in 2018, the bank settled a cumulative foreign exchange of twelve trillion five hundred and sixteen billion yuan (equivalent to one trillion eight hundred and ninety one billion six hundred million US dollars) and sold twelve trillion nine hundred and six billion yuan (equivalent to one trillion nine hundred and forty seven billion six hundred million US dollars) of foreign exchange. The cumulative deficit in settlement and sale of foreign exchange was 390 billion yuan (equivalent to 56 billion US dollars).
In other words, a total of $56 billion went overseas last year.
According to the Chinese Academy of Social Sciences, capital outflows from China`s balance-of-payments account reached $1.28 trillion in just two years from the peak of foreign exchange losses in 2015-2016.
While the official figures are just the tip of an iceberg of huge amounts of Chinese capital flowing overseas in recent years, behind them are China`s government`s increasingly tight rules on foreign exchange controls in recent years.
In January 2017, China`s Foreign Exchange Administration announced new rules that, while maintaining a limit of 50,000 US dollars for foreign exchange purchases, require foreign exchange buyers to fill in "individual applications for foreign exchange purchases" and that foreign exchange purchases should not be used for overseas home purchases and securities investments.
In January 2018, the State Administration of Foreign Exchange also stipulated ("notice on regulating large-scale cash withdrawals outside bank cards"), the limit of cash withdrawal from domestic bank cards abroad is one hundred thousand yuan.
In June 2018, China`s citizen cut the daily limit on foreign exchange cash to $5000 per person in banks from $10, 000, while many banks refused to do business on the grounds of insufficient foreign currency cash.
In October 2018, the government department issued new regulations (measures on the Administration of Anti-money laundering and Anti-terrorist financing of Internet Financial institutions), and customers of Internet financial institutions traded more than 50, 000 yuan on the same day. For foreign currency equivalent of more than US $10,000 in cash income and expenditure, financial institutions shall submit a large transaction report.
From January 1, 2019, personal transactions will be 50, 000 yuan, transfers more than two hundred thousand yuan will be directly supervised by the central bank. The scope of regulation, in addition to banks, also includes Alipay, social app, Baidu wallet and other non-bank payment institutions.
Before the Chinese Lunar New year bell rang, China`s two high-level judiciary jointly issued the illegal foreign exchange trading standards and sentencing standards, and announced the implementation of the relevant regulations from Feb. 1, 2019.
1. China`s two high-level judicial authorities have issued new rules, severely punishing underground banks.
On January 31st, the Supreme people`s Court of China and the Supreme people`s Procuratorate jointly issued an explanation on the application of law in criminal cases of illegal payment and settlement of funds and illegal foreign exchange transactions (hereinafter referred to as the "interpretation"). The determination of illegal foreign exchange, sentencing standards are clear, from February 1, 2019.
In regard to the determination of illegal foreign exchange transactions, the "interpretation" stipulates that, in violation of state regulations, illegal foreign exchange transactions such as buying and selling foreign exchange or trading in foreign exchange disguised shall be carried out in order to disrupt the order of the financial market, and the circumstances are serious, Convicted and punished for the crime of illegal business.
Article 225 of the Criminal Code clearly provides for the punishment of the crime of illegal business:
If the circumstances are serious, the offender shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and concurrently or solely be sentenced to a fine of not less than one and five times the illegal proceeds;
If the circumstances are especially serious, the offender shall be sentenced to fixed-term imprisonment of not less than five years, and concurrently be sentenced to a fine of not less than double the illegal proceeds and not more than five times
Among them, if the amount of illegal business operation is more than 5 million yuan, or the amount of illegal income is more than one hundred thousand yuan, it shall be considered as "serious circumstances"; If the amount of illegal business operation is more than 25 million yuan or the amount of illegal income is more than five hundred thousand yuan, it shall be considered as "the circumstances are especially serious".
At the same time, in the form of "amount plot", the explanation also defines four kinds of cases which can be considered as "serious circumstances" and "especially serious circumstances". If there are any of the following four cases, and the amount of illegal business operation is more than 2.5 million yuan, or the amount of illegal income is more than 50, 000 yuan, it may be regarded as "serious circumstances"; If the amount of illegal business operation is more than 12.5 million yuan or the amount of illegal income is more than two hundred and fifty thousand yuan, it can be regarded as "particularly serious in circumstances":
Having been criminally prosecuted for illegally engaging in settlement of funds or illegal foreign exchange trading;
Those who have been subject to administrative penalties within 2 years for illegally engaging in settlement of funds payments or illegal foreign exchange transactions;
Refusing to account for the whereabouts of the funds involved in the case or refusing to cooperate with the recovery work, resulting in the inability to recover the stolen money;
Causing other serious consequences.
According to a report by the City Financial Daily on February 12, a person in charge of the third Division of punishment of the Supreme people`s Court and the law Policy Research Office of the Supreme people`s Procuratorate said that the introduction of the "explanation" was aimed at preventing and defusing major financial risks for China`s government. Maintain financial market order and financial security.
The person in charge added that illegal trading of foreign exchange by underground banks is a key target of the interpretation.
In recent years, criminal activities involving underground banks, such as illegal payment and settlement of funds and illegal foreign exchange transactions, have become increasingly rampant, and criminal cases involving underground banks have been increasing. Cross-border payment of funds has led to huge flows of capital from China to overseas.
Especially in Guangdong, Shenzhen and other coastal areas adjacent to Hong Kong, the existence of underground banks is actually "quite related", active and repeatedly banned.
In the early days of reform and opening-up, the state encouraged the accumulation of foreign exchange reserves through exchange of overseas Chinese remittances, while the Chaoshan region of Guangdong Province has a large number of overseas Chinese, and Shenzhen is at the forefront of reform and opening As a result, Chaoshan people, based on overseas Chinese remittance business, formed an industrial chain of foreign exchange in Shenzhen, commonly known as "underground bank", and continue to this day.
The trading methods of "underground banks" mainly include: the more traditional buying and selling of foreign exchange in the form of domestic direct trading; And the current common "knock-on" way of capital cross-border (cross-border) payment of foreign exchange transactions in disguise.
In an interview with the 21st Century economic report, a insider revealed:
"the most original `exchange` method is to carry cash, some countries have restrictions on the amount of cash for entry and exit entrainment, one way is to make multiple trips through the sea tactics, and the other is to smuggle the goods directly through special passageways. Through the inspection, Shenzhen and Hong Kong across a river, `water passenger` is more convenient to do. "
The insider added, "this is a more labor-intensive approach, and the most popular is the `account pair knock`."
The so-called "account pair knock", refers to "underground banks" in the domestic collection of customers RMB, after calculating the exchange rate and commission, and then notify the foreign partners to transfer the corresponding foreign currency to the foreign account designated by the customer; If the customer`s foreign currency is collected abroad, the method of operation is just the opposite.
In this way, there is no fund exchange between the domestic and foreign accounts of the underground banks, and there is no selling behavior on the surface, but the illegal exchange of foreign exchange activities has been completed in essence. This model makes it easier for criminals to transfer funds from within the country to the outside world. Moreover, with the development of Internet technology, many underground banks begin to pay and buy foreign exchange in the form of virtual currency, which is also a key background of "explanation".
In fact, because the illegal business activities of underground banks are very covert, the quantity of underground banks in China and the amount of funds in circulation are difficult to accurately calculate.
But we can still take a peek at the circulate a notice of China`s public security and safe.
According to statistics, in 2016, public security organs across the country cracked more than 380 major cases in underground banks, arrested more than 800 suspects, and cracked down more than 500 crime shelters, with a total transaction amount of more than 900 billion yuan.
According to the State Administration of Foreign Exchange Annual report 2017, in 2017 more than 1400 cases of illegal foreign exchange transactions involving underground banks were investigated and dealt with, with administrative fines of hundreds of millions of yuan; among them, there were nearly 100 cases of exchange-type underground banks involving hundreds of billions of yuan.
According to some typical cases detected by Chinese public security organs, the operation of underground banks in some places has formed a certain scale, and the amount of funds in hand is very large. Last month, for example, police in Beijing and Macao worked hard to solve a case involving more than 30 billion yuan in extra-large cross-border underground banks.
Earlier, in November 2015, public security organs in Jinhua City, Zhejiang Province, cracked a loophole in a NRA account (a domestic foreign exchange account, also known as a non-resident account, opened by a foreign agency in accordance with the regulations of domestic banks). Cases of underground banks carrying out illegal cross-border transfer of funds. Xinhua reported that the amount involved in the case amounted to more than 4100 million yuan, after the prosecution authorities to illegal business crime against the crime of gane accusation.
Police seized part of the card and U-shield / source: China Police Network
"under the cover of the nest, there is no complete egg."
Although the explanation is mainly aimed at the operators of illegal underground banks, there is no doubt there is a big alarm for overseas Chinese home buyers who have a large demand for foreign exchange, as well as companies and individuals with foreign exchange needs.
2. Under the "hoop spell", it is becoming more and more difficult for Chinese to buy a house in Australia.
In recent years, China`s State Administration of Foreign Exchange for individuals to evade foreign exchange increasingly strong supervision.
According to the case of circulate a notice in 2018, illegal trading in foreign exchange has become a major disaster area for individual foreign exchange violations.
According to the statistics of "Australian Financial and Financial Information", throughout 2018, safe had a total of 130 typical cases of foreign exchange violations in circulate a notice, 36 cases involving individuals, 15 of which were illegal foreign exchange transactions, and a total fine of thirty nine million forty eight thousand six hundred and ninety nine yuan was imposed. An average fine of two million six hundred and three thousand one hundred and ninety nine yuan per case.
Source: circulate a notice Information of the State Administration of Foreign Exchange
In fact, the purchase of overseas real estate is one of the main purposes for individuals to illegally trade foreign exchange to transfer assets abroad.
In December 2018, safe circulate a notice had typical cases of individual foreign exchange violations and violations, of which quite a number of them had "escaped foreign exchange purchase", including:
From January to July 2016, in order to achieve the purpose of illegally transferring assets abroad, Shen made use of the annual quota of individual foreign exchange purchases of 34 domestic individuals, split the individual funds into foreign exchange accounts and remitted them to overseas accounts to purchase overseas real estate, and so on. Illegal transfers totaled $2.04 million.
From November 2017 to April 2018, in order to achieve the purpose of illegally transferring assets abroad, Sui used the annual quota of individual foreign exchange purchases of 173 domestic individuals to split the personal funds and remit them to an offshore account to purchase overseas real estate, and so on. Illegal transfers totaled $twelve million fifty six thousand five hundred.
In addition, the first disclosure of individual penalties for foreign exchange violations was included in the credit collection system of the people`s Bank of China for the first time in the foreign exchange violation case circulate a notice of the safe on December 6, 2018, and the illegal individuals were also managed by the "attention list". This means that since then, individuals who trade in foreign exchange illegally have been fined, and will be placed on the "attention list" and included in the central bank`s credit collection.
Guan Tao, a former senior official in charge of China`s foreign exchange policy, said in an interview with AFR that "the tightening of the regulations represents a serious warning [from China`s government] to illegal capital trading institutions, which will also affect China`s illegal capital outflows."
Australia`s home-grown real estate developers, agents and accountants claim the changes in China`s foreign exchange regulations have further dampened Chinese buyers` interest in Australia`s flagging real estate market. It may even scare off Chinese buyers who had intended to go through normal legal trading channels.
Jack Zhang, a Sydney-based accountant, told AFR that "most people will be afraid of transferring money, even if it is legal, because they will disappear or be unable to follow up."
Developers said this would slow the pace of transactions in Australian apartments paid for in "renminbi".
Walton Chu of Home789, a local agent, said it would further dampen the interest of overseas buyers who had already been hit hard by a string of additional costs to buy real estate in Australia.
In fact, Chinese buyers looking to buy Australia`s real estate are now in a dilemma:
On the one hand, China`s foreign exchange controls continue to tighten, and on the other hand, Australia`s loan policy continues to tighten.
Many potential home buyers are fearful, and those who have already paid the down payment are more difficult to ride: if they choose to continue paying, the next situation will be even more difficult; However, if not paid, it means a loss of down payment, "cut out of the game."
"Ant moving" has long been the past, and many Chinese buyers who had expected real estate to provide a "one-stop" service ended up with a "home-to-house fortune".
Last year, for example, the collapse of (Ausin), the real estate sales agency, caused the settlement of 130 homes in Australia to fail, and more than 100 Chinese buyers said they had suffered a huge loss of millions of Australian dollars. (click to read more < Australian Credit China reveals new news again! Responsible person secretly transfers funds, hard-earned money to whom to ask for return?
They could not have predicted that the once-successful, once-sought-after Australian giant by Chinese buyers would have hit a rock so suddenly.
"until the first half of 2016, the company was the top seller of residential flowers," an employee who worked for Australian Credit said on the Internet. Although several big banks are selling more than ASIC, it does not sell directly, but rather acts as a channel management role, while the company is a real-gun barearm, selling with its own sales team. At that time, it was normal to sell 3,000 or 4,000 sets of house a year, at a 5% commission, a year`s book income was more than 100 million Australian dollars. "
Some of the clients told AFR, they had paid the whole house directly to Australian letter because they didn`t know how to transfer the money out of China, and they couldn`t get mortgages from Australian banks.
It is clear that Aussie not only charges Chinese buyers a commission, but also undertakes Chinese buyers to bypass capital outflow controls and channel the money into Australia. With the Aussie road blocked, the sensitive market response has long sniffed out the existence of other channels.
3. Market reaction of "as virtue rises one foot, vice rises ten"
There is a Chinese saying, "you have a plan, I have a wall ladder."
In an austere Australian housing market, some Australian developers have even come up with innovative strategies to "accept renminbi payments" to attract Chinese home buyers.
AFR recently reported that due to slow sales of townhouses in Burwood`s Glengarry Avenue, the developer recently started sending private quotes to customers in the database through its main agent, Kollins Property Investment. "customers can pay RMB in China," he said in an e-mail to clients.
This way of payment allows buyers to pay to an office account in China without having to remit money to Australia.
"while such payments are not common, developers are trying to attract more customers," Kollins`s Kelvin Ng said. Generally speaking, although developers are not satisfied with the market now, we are still optimistic about future sales. "
In addition, some Chinese buyers are turning to the bank`s out-of-memory lending business.
For example, the Bank of China`s "finance and financing" service for out-of-memory loans allows customers to deposit a term deposit of 10 million yuan with the Bank of China in China, and then Bank of China Hong Kong can make a similar amount of Hong Kong dollar loan in Hong Kong for the customer. To invest in immigration-related financial investments.
Bank of China "account Link" can also provide China mainland customers with the witness of Australia and other countries account opening business, customers do not have to go in person can apply through the Bank of China branch to open an overseas local account in advance.
In addition to the Bank of China, private banks of other banks have also made cross-border financial services the focus of serving high-end customers, adopting domestic deposits or escrow assets, and lending money abroad to finance customers abroad. Facilitate investment in fixed assets or capital markets.
Of course, the threshold of private banks is higher, above 6 million yuan, ICBC and Bank of China threshold is 8 million yuan, China Merchants Bank is 10 million yuan.
But "out-of-memory loans" are not necessarily risk-free. It is understood that different banks in the specific approval procedures and length of time is different. Banking insiders said: "many banks in this business, the reasons for the loan will be strictly reviewed." For domestic deposits, customers are required to provide legal sources of income proof. A lot of people are stuck in proof. "
In addition, in the process of "out-of-memory loans", it may be subject to foreign exchange control by different countries, that is, there is the possibility of policy risks.
