The State Administration of Foreign Exchange (SAFE) has recently published the Circular of the State Administration of Foreign Exchange on Regulating Large-sum Overseas Cash Withdrawals with Bank Cards (Huifa No. 29 [2017]) (Circular), and its official answered media questions on relevant issues.

1. Could you brief us on the background of the Circular?

A: Alongside technical advancement, non-cash payment has been proliferating and offering increasing convenience. The international regulators' experience also shows that large-sum cash transactions tend to be associated with illegalities such as frauds, gambles, money laundering and terrorist financing. Given this, large-sum cash management is being intensified worldwide. Our monitoring finds that some individuals have withdrawn large sums of cash overseas with many bank cards, which are well above the payments for normal consumption, and are therefore suspicious of violating laws.

Regulating large-sum overseas cash withdrawals with bank cards is crucial to cracking down on money laundering, terrorist financing and tax evasion, and can help guard against illegalities associated with cash withdrawals with bank cards. The Circular, aligned with the requirement of ensuring currency convertibility under the current account, does not contradict with the annual quota of USD 50,000 for foreign exchange purchases by individuals, or affect individuals' normal withdrawals of cash and consumption or the convenience for individuals to use foreign exchange.

In addition, the SAFE is negotiating with overseas regulators the establishment of the information communication mechanism for regulating large-sum cash withdrawals, in a bid to enhance regulation and collaboration and guard against risks associated with cross-border money laundering.

2. What are the highlights of the Circular?

A: First, in overseas cash withdrawals by individuals with domestic bank cards, the sum of withdrawals using the bank cards under the name of the individual (including additional cards) shall not exceed the equivalent of RMB 100,000 in every civil year.

Second, the daily quota per card for overseas cash withdrawals with RMB cards and foreign currency cards is the equivalent of RMB 10,000.

Third, in case of overseas cash withdrawals in excess of the annual quota, the individuals will not be allowed to withdraw cash overseas with the domestic bank cards in the current and second years.

Fourth, individuals are prohibited from borrowing others' bank cards or lending their own bank cards to evade or help evade the management of overseas cash withdrawals.

3. Will the introduction of the Circular impact overseas consumption by cardholders?

A: The introduction of the Circular will not impact overseas consumption by cardholders. Bank cards have become one of the most convenient payment tools for overseas consumption. They can be used for catering, accommodation, transport and purchases in overseas travel, business trips and study abroad, and does not offset the annual quota of USD 50,000 for foreign exchange purchases by individuals. The Circular is designed to standardize the large-sum overseas cash withdrawals with bank cards and will not change the basic framework for foreign exchange administration with regard to bank cards and the policy for the use of foreign exchange by individuals, or affect overseas consumption by individuals with bank cards.

4. What are the considerations behind the annual quota of RMB 100,000 for overseas cash withdrawals, as stipulated in the Circular?

A: The quota-based management of overseas cash withdrawals with bank cards has been adopted since 2003, with the current quota no higher than RMB 100,000 per card per year. To prevent lawbreakers from withdrawing a large amount of cash with many cards from different banks, the Circular adjusts the annual quota for overseas cash withdrawals to RMB 100,000 per person per year.

Statistics show that 81% of overseas cash withdrawals with domestic bank cards were lower than RMB 30,000 in 2016. The annual quota of RMB 100,000 as stipulated in the Circular can meet cardholders' requirements for normal cash withdrawals overseas and curb large-sum cash withdrawals by a few lawbreakers.

If an individual does need to use large sums of cash overseas and will not violate regulations, they can handle it in accordance with relevant regulations for foreign exchange administration such as the Measures for the Administration of Individual Foreign Exchange, and the detailed implementation rules. For example, they can leave for China with foreign currency banknotes after buying foreign exchange in accordance with the law.

5. Will it be likely that individuals withdraw cash in excess of the annual quota after the Circular becomes effective? If yes, what impact will that have?

A: The annual quota will be subject to the control by the SAFE through the card-issuing financial institutions based on the collection and calculations of the data from the card-issuing financial institutions. Considering that real-time control will postpone response and affect experience with the card, the SAFE adopts delayed control. Therefore, individuals shall well plan overseas cash withdrawals and ensure the quota will not be surpassed. In addition, the Circular requires the card-issuing financial institutions to properly notify the cardholders who withdraw cash overseas of watching policy changes and to step up policy promotion.

To guard against malicious withdrawals by some cardholders, any individual who withdraws more cash than permitted will not be allowed to withdraw cash overseas with the domestic bank cards in the current and second years, and will be punished in accordance with the Regulations of the People's Republic of China on Foreign Exchange Administration, depending on the severity.

6. When will the Circular come into force?

A: The Circular will become effective on January 1, 2018, with the 2018 annual quota for overseas cash withdrawals calculated on an accumulative basis starting from the same day.

7. Are individuals allowed to inquire about the breakdowns of overseas cash withdrawals with their bankcards?

A: Any individual who is on the list of individuals whose right to withdraw cash overseas with domestic bankcards is suspended is allowed to inquire of the card-issuing financial institution about the breakdowns of the withdrawals using the bank card issued by the institution, or inquire of the branches or sub-branches of the SAFE by presenting their valid ID card.

It should be noted that the SAFE has confidentiality provisions on the breakdowns of cash overseas withdrawals with bankcards and stipulates that any use of the breakdowns should comply with laws and regulations, and card-issuing financial institutions should properly keep the information on any individual whose right to withdraw cash overseas with domestic bankcards is suspended.

8. What suggestions do you have on overseas cash withdrawals by individuals with bank cards?

A: Any individual who wants to withdraw cash overseas should protect their own interest. First, they should have a good plan for the use of foreign exchange, reducing the amount of cash carried or used, lest their personal and property security should be threatened by robbery. Second, they should be mindful of card security and information protection, lest their bank cards should be stolen, which will interrupt normal transactions. Third, they should use their bank cards in accordance with laws and regulations. They should not borrow others' bank cards to evade quota management, or lend their own cards to others lest the latter should use the cards for illegal purposes.