The new cross-border remittance regulations are implemented: more than 5,000 yuan must be real-named, and the impact of Chinese transfers is significant

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On August 4, the People’s Bank of China, the State Administration for Financial Supervision and Administration, and the China Securities Regulatory Commission jointly issued the “Regulations on the Preservation of Customer Due Diligence and Customer Identity Information and Transaction Records of Financial Institutions (Draft for Comments)” to solicit opinions from the public, and the deadline is September 3.

One of the core of the file is toSingle foreign exchangeofCustomer verification and information transmission with the moneyRequire “explain it clearly”, and the threshold is clear to “RMB 5,000 or equivalent USD 1,000 or above”. This is why it pushed “remittances from domestic to overseas” to the forefront as soon as it appeared.

Unlike the anxiety of the Internet interpreting “whether foreign exchange is tightened again”, this draft is closer to its positioningMake the underlying requirements of anti-money laundering (AML) into operational detailsand in line with international standards (FATF “Travel Rules”/R.16). FATF just updated its payment transparency and “payment information” rules in June this year, emphasizingCross-border payments must be paid with the real payer/payer informationand introduce finer granularity recording and verification requirements for some cases.

1) Write the trigger threshold for cross-border remittances to the public.

The draft clearly states:For customers to transfer funds from abroad, the amount of a single transaction is RMB 5,000 or the equivalent value of foreign currency is US$1,000 or abovefinancial institutions shouldVerify the identity of the remitter and ensure the information is accurate,andPass key elements with the moneyto overseas receiving agencies (typically transmitted through the payer/payer field of SWIFT packets). This not only contains name or name, account number, residence information; if the remitter has not opened an account at the institution, he or she must also register.ID number, contact informationetc. traceable information.

2) “Transfer with the money + traceability” is a hard rule.

Intermediate banks and collection banks also have the obligation of “information integrity”: if the data is missing, it can be supplemented, suspended or even refused to process; if the information is incomplete from abroad, the receiving agency should ask the other party to make up for it.Customer identity information and transaction records are kept for at least 10 years. This is the core of “leave traces in the entire chain”.

3) Not all “large amounts of cash” must be rigidly explained “source/purpose”.

The draft simultaneously sets up one-time “counter” financial services in China (such as cash remittances, cash exchanges, physical precious metal trading, etc.)RMB 50,000 or equivalent US$10,000due diligence threshold, butCanceledIn the old rules, “Individual deposits and withdrawals of more than 50,000 yuan in a single cash transaction must be registered for ‘source/purpose of funds’”rigidExpression, changed toRisk-oriented(The verification is strengthened only when the high risk is high). That is to say,It is not an old rumor to restore the “50,000-1000” purpose。

4) The coverage has expanded significantly, not just the banks.

Payment institutions, prepaid card issuers, online micro loans, etc. are clearly included in the AML obligations, and are required to perform KYC, information retention and payment transfer responsibilities. This is consistent with the global integration of “non-bank payments” into travel rules.

Many people give “$1,000 verification + delivery”It is understood as lowering the threshold from “10,000 US dollars”. Actually it isThe “shadow overlap” of two different rules:

• $1,000 thresholdFrom the International Payment Transparency/Travel Rules “Information with the payment“Requirements (cross-border payments must bring real payer/payer information for easy traceability), which has been implemented worldwide for a long time; this draft is to put this matter at the domestic regulatory levelWrite in detail and thoroughly。

• $10,000More familiar to the publicLarge suspicious transactions/cash declarationsContext, focus onReporting and monitoringnot a technical compliance that “information is transmitted with the money”. Both will be in realityOverlay,butNot the same thing. The official media also made it clear:“Cross-border remittances above US$1,000 are not new requirements”。

“Intuitive influence” on Chinese people in the United States:

First, the compliance path is feasible, but“Thinner materials and transparent links”。

From China, we will receive tuition/living expenses for children in the United States, support our spouse, pay medical bills, etc.Right use，Still can be handled smoothly. But compared with the past, the three points and one line of “people, accounts, and uses” must beMore consistent: The name/account/dwelling and other elements must be accurate.Use certificates must be traceable(Admission notice, tuition form, bill contract, etc.). Information meetingPass with the money messageGo to the US collection bank,Reduce the chance of “being stuck after arriving in the United States”。

Second, “split transfer”, “payment by relatives and friends” and “underground bank/OTC” will become increasingly unfeasible.

Travel rules emphasize “Traceable“. No matter how small the amount is,As long as high-risk characteristics are triggered(For exampleMultiple people intensively deposit small amounts of money from the same overseas accountuse and identity do not matchTypical “split” track），The system will alertfinancial institutions canPause/rejectand make suspicious reports. Compliance costs increase, gray pathFunds are frozen, inquiry, tax reimbursement + fineThe risk increased sharply.

Third, the collection end (Bank of America) is more “picky”.

The United States has long implemented itTravel rules/record saving(BSA), banks see incoming payments from ChinaComplete and transparent message fieldsWill be more at ease; if the fields are missing,Return or review. From the user’s perspective,Completion of the accompanying information at one time,insteadMore trouble-free。

If you currently need it, transfer from China to the United States, it is recommended:

1) The information is ready at one time.

• Identity/Contact Information: ID number, address, mobile phone number;

• Account elements: Remittance/payment name (consistent with the account), account number/IBAN, payment bank SWIFT/BIC, branch address (if required);

• Use certificate: Admission notice, tuition bill, medical/rental contract, maintenance relationship and supporting documents, etc.;

• Consistency verification: The information of people, accounts and uses is consistent, so as to avoid “not being worthy of the name”.
  These information mustRemain in the institutional systemwillPass with the money messagecan significantly reduce the number ofArtificial replenishment or return。
  

2) Avoid high-frequency “ant moving”.

Multiple people go to the same US accountHigh frequency small deposits are typicalHigh risk trajectory;on the contrary,By regular use, by documenteasier to control through the system.

3) Have expectations for the timeline.
The draft is inPublic consultationStage (endSeptember 3rd); from the perspective of regulatory caliber and technical preparation,Implemented within the yearThe possibility is high, and financial institutions still need to complete itSystem transformation and message field upgrade. Individuals and enterprises should try their bestPlan ahead。

4) Understand “who is looking at what”.

• Chinese side institutionsLook at yoursIdentity authenticity, purpose and track；

• Cross-border linkslookIs the message field complete?(Originator/Beneficiary information);

• US collection banklookIs the source and use self-consistentwhether it matches the customer portrait (BSA/travel rules are consistent).

If the remittance is used for study abroad/tuition fees: Use tuition bill + admission letter/proof of enrollment; state “tuition payment + student name/student number” in the notes column; avoid “collecting” with more small amounts from non-direct relatives.

If the remittance is usedAlimony/living expenses: Prepare kinship and purpose description; fixed rhythm, fixed amount, fixed source account,Less changes。

If the remittance is usedMedical / Rent: Contract + bill scan, add doctor/landlord information if necessary;Pay-off in one lump sum is better than frequent small amounts。

If the remittance is usedInvestment/asset allocation: Compliance channels (such as QDII/Shanghai-Shenzhen-Hong Kong Stock Connect, QDLP/QDIE, etc.) are preferred and stay away fromUnderground Bank/Virtual Currency OTCCross-border foreign exchange.

For Chinese families in the United States, the compliance path is still smooth, but more refined materials and consistency are needed. By the rules, you will be less stuck.

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