Chinese investment in PA real estate about to get a lot smaller.
Original post made by Noah, Crescent Park, on Jul 15, 2014
Last week. China Central Television leveled money-laundering allegations against Bank of China program that enables individuals to transfer their yuan and convert it into dollars or other currencies overseas.
Offered by some banks in the southern province of Guangdong, across the border from Hong Kong, the trial program was introduced in 2011 for overseas property purchases and emigration and doesn’t constitute money laundering, Bank of China said in a July 9 statement. The transfers were allowed by regulators and reported to them, the bank said.
China’s foreign-exchange rules cap the maximum amount of yuan that individuals are allowed to convert at $50,000 each year and ban them from transferring the currency abroad directly.
The issue came to light after CCTV said Bank of China helped customers transfer unlimited amounts of yuan abroad through a product called Youhuitong, which means “superior foreign-exchange channel.”
The central bank in February unveiled rules to make it easier for companies with operations in Shanghai’s free-trade zone to move yuan in and out of the
The Guangdong branch of China’s currency regulator, the State Administration of Foreign Exchange, picked Bank of China, China Citic Bank Corp. to let individuals transfer yuan abroad in a trial the banks were told not to promote. It is estimated the Bank of China moved 20 billion yuan ($3.2 billion) abroad through Youhuitong.
On CCTV’s website, the report on Bank of China hasn’t been viewable since at least July 12.
A delegation from Bank of China which was due to visit Frankfurt this week to discuss issues including a planned yuan clearing service in the city has canceled the trip amid the controversy over the CCTV report, the newspaper Handelsblatt reported today, without citing anyone. Youhuitong has been suspended while the PBOC and its anti-money laundering bureau request records of all previous transactions, according to a person familiar with the product, who asked not to be identified because he wasn’t authorized to speak publicly.
Transfer approval for Youhuitong customers usually takes several weeks to a month, the person said. They need to provide documents showing how the money to be transferred was obtained, such as tax-payment receipts and proof of income, as well as a property-purchase agreement or proof of emigration, he said.
Youhuitong customers would typically deposit yuan with Bank of China at least two weeks before the transfer, the person said. Once approved, the customer and the bank agree on an exchange rate before the funds are moved to an overseas account designated by the custome. Money destined for real estate would go directly to the property seller’s account to ensure the cash won’t be misused, he said.
HSBC Holdings Plc which runs the largest branch network among foreign banks in China, offers its Chinese clients another way to access offshore mortgages while avoiding the cap on foreign-exchange conversion. Customers deposit yuan with HSBC’s mainland unit or purchase its wealth-management products, and the bank’s overseas branch then issues a foreign-currency denominated mortgage using the China deposits as collateral. Affluent Chinese have been moving money overseas in search of greater investment returns. China’s benchmark stock index has tumbled 66 percent from its 2007 record, while the government has clamped down on property lending to rein in rising prices.
Chinese buyers, including people from Hong Kong and Taiwan, spent $22 billion on U.S. homes in the year through March, up 72 percent from the same period in 2013 and more than any other nationality, the National Association of Realtors said in its annual report on foreign home purchases.
China needed to improve its oversight of capital flows after $2.7 trillion in unexplained funds moved overseas in the decade prior to 2012, Anthony Neoh, a former government adviser who helped the country open up to foreign money managers, said last year, citing data from Integrity International. Those funds fueled property bubbles in cities such as Hong Kong instead of being invested in domestic assets, he said.
2017 guide to summer camps
Looking for something for the kids to do this summer, learn something new and have fun? The 2017 Summer Camp Guide features local camps for all ages and interests.