Those who have been dealing with China for business know that China, as a country, is heavily regulating its cross-border financial markets, I mean the flow of money across Chinese borders. It is not too much to say that China watchdog, the State Administration of Foreign Exchanges, the so called "SAFE", keeps tracks on all money flows across Chinese borders through its banking systems.
In our cross-border family and inheritance practices, we often need to deal with foreign exchange issues for our overseas clients who may end up owning a real property, bank account or securities account in China, and after they cash in on those assets, they want to take money out of China to their home countries. Here comes aways the problem of foreign exchange control in China.
Very often many clients cannot take their RMB money out of China because of failing to meet the requirements set by SAFE. Unlike the general civil law arenas where conducts are allowed if not expressly prohibited by law, in the area of foreign exchanges law, nothing can be done if there are no clear rules and path set down by the laws and the regulatory bodies.
On October 31, 2025, three watchdogs in Chinese financial sectors including China Central Bank, China Banking Regulatory Commission and China Securities Regulatory Commission issued a new regulation imposing stricter rules in executing the "know your customers" rule and keeping transaction records for longer period of time (from 5 years to 10 years). This new regulation takes effect from January 1, 2026.
In this new piece of regulation, Article 34 contained a paragraph that sparked a lot of attention from the media, here it is:
金融机构和从事汇兑业务的机构为客户向境外汇出资金金额为单笔人民币5000元或者外币等值1000美元以上的，应当核实汇款人信息的准确性。有合理理由怀疑客户涉嫌洗钱或者恐怖融资的，无论汇出资金金额大小，金融机构都应当采取合理措施核实汇款人信息。
Translation: Financial institutions and entities engaged in exchange services must verify the accuracy of the remitter’s information when a customer remits funds abroad in a single transaction exceeding RMB 5,000 or the foreign-currency equivalent of USD 1,000. If there are reasonable grounds to suspect the customer of money-laundering or terrorist financing, the institution shall, regardless of the amount, take reasonable measures to verify the remitter’s information.
As you can see, from January 1, 2026, when sending money out of China to an overseas bank account, if the amount is more than RMB 5000 or USD 1000, then Chinese banks handling the transaction will surely impose stricter measures to verify the identity of the remitters. Prior to this new regulation, banks won't be serious about verifying identity of the account owners when the transaction amount is as little as RMB 5000. We believe banks in China will augment ID verification process by upgrading their mobile banking system to lower the threshold of using face scanning for similar transactions.
It is understandable for SAFE to step up such measures because in the past it is an open secret that a lot of money was sent out of China utilizing the annual quota of USD 50,000 enjoyed by Chinese citizens (not foreigners). In other words, the remitter sending money out of China can control several or a lot of bank accounts owned by Chinese citizens and then convert RMB to USD up to USD 50,000 in each account, and finally sent the USD amount to foreign bank accounts. Prima facie, it is all legal, as Chinese foreign exchange law allows its citizens to send USD 50,000 overseas per year.
But Chinese government wants to plug the loophole in further controlling money outflow out of this country, esp in an era when USDT has been widely employed in illegal cross-border money moving.
We will see how the banks react to such new regulation, and will be happy to report our own experience in sending money out of China.
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