Foreign Exchange Rules for Non-Residents

China has new foreign exchange regulations to take effect in March 2004 to fight money laundering and better manage currency transactions. The new regulations, which will affect individual non-residents, were published by the State Administration of Foreign Exchange (SAFE) on February 24.

Individual non-residents are foreigners, residents of Hong Kong and Macao special administrative regions and Taiwan, as well as individuals who hold a Chinese passport but have won permanent staying rights outside China.

The regulation also aims to prevent money laundering and other illegal cash movements based on the speculative appreciation of the Renminbi, while ensuring that legal use of foreign exchange by non-residents-such as shopping, travel and purchase of real estate and B shares-is protected, a SAFE spokesperson said.

Under the new rules, non-resident individuals can hold, deposit or sell to banks foreign exchange they bring from abroad. However, non-residents will have to show their ID when opening a foreign exchange account and other documents when depositing more than US$5,000 a day.

Foreign exchange regulators are scrutinizing the process of selling foreign exchange to banks as it can lead to greater upward pressure on the Renminbi. In selling their foreign exchange to banks, non-residents need approval by local foreign exchange regulators when their monthly sales surpass US$50,000.

The purpose of all the new measures is to collect data on foreign exchange receipts and payments of non-resident individuals, help banks verify transactions and assist regulators in foreign exchange management.