China to boost scrutiny of foreign currency purchases

Bloomberg

China plans to step up its monitoring
of how citizens use their annual quota for changing yuan into foreign currencies, according to four people familiar with the matter.
The State Administration of Foreign Exchange was required extra documentation for people seeking to sell yuan, while keeping each person’s
annual $50,000 allowance unchanged, said the people, who asked not to
be identified as they’re not allowed to speak publicly. Banks will be asked
to increase scrutiny of transactions, they said.
At present, there is no change to the current policy regarding foreign exchange purchases by individuals, SAFE said in a statement to Bloomberg News. Individuals need identification cards to buy foreign exchange at banks within their annual quota, and if the purchase value exceeds annual quotas, they must also provide documents to verify the transaction value, the administration said.
The annual limit for individuals resets for the year 2017, potentially
aggravating capital outflow pressures that have already been intensifying after the yuan suffered its steepest annual slump in more than two decades. An estimated $689 billion flowed out of the country in the first 10 months of 2016, according to a Bloomberg Intelligence gauge.
The People’s Bank of China said it will require financial institutions to report any cross-border transfers of 200,000 yuan ($28,800) or more starting July 1, as part of new efforts to curb money laundering. Regulators say they want more timely data on individuals to track risks arising from increasing cross-border transfers, according to a statement.
China’s foreign reserves, the world’s largest stockpile, fell to a five-year low of $3.05 trillion as of November.
The $99 billion drop in January, the largest in 2016, followed the last reset of the controls. Data that was releases on January 7 will show the hoard fell
to $3.01 trillion, according to the median estimate of economists surveyed by Bloomberg.