How wealthy Chinese move money abroad
July 14, 2014
Laws in China limit citizens to $50,000 in foreign exchange, so how do they transfer money abroad for investment?
The South China Morning Post reports that rich Chinese hoping to immigrate to the United States elude their country’s foreign exchange laws in a number of ways — from simple to complex. According to US Citizenship and Immigration Services, the United States is the most desirable destination for Chinese immigrants. However, to qualify for a green card via investment, applicants are required to invest at least $1,000,000 (or $500,000 in a targeted employment area). Here are some ways the Chinese have successfully transferred the funds.
1. Transfer the money to family and friends, split among as many accounts as possible.
2. Underground money changers. “A client transfers funds to the money changer’s mainland account first. Then the money changer will remit the equivalent in foreign currency to the customer’s overseas account,” according to the South China Morning Post.
3. Private banking. “Banks on the mainland help their wealthy clients open overseas accounts within the same bank. After that, they can apply for loans overseas and get foreign currency. Usually this method requires deposits of between 6 million and 10 million yuan.” (id)
4. Trade. After setting up offshore companies, owners can fake trade contacts to transfer money out.
5. Direct business investment. It is easy for foreign companies to transfer money out.
6. Marriage. Chinese who have married a foreigner can more easily transfer money out of China.
7. Traveling with cash (risky).