Are you paying or receiving cash for transactions? Now it’s time to pay attention! China plans to launch large-sum cash management trials. The large-sum cash usage situation for individual accounts will be monitored and investigated.
On November 5, the People’s Bank of China (PBOC) issued the draft version of the Notice of the People’s Bank of China Concerning the Undertaking of Large-sum Cash Management in the Trial Areas of Hebei Province, Zhejiang Province and Shenzhen Municipality released for public opinion.
Cash demand has grown in recent years in China despite the rapid development of cashless payments including Alipay and WeChat Pay.
Besides, cash can be extensively used in many situations, leading to concerns about the use of large cash amounts for illegal activities including corruption, tax evasion and money laundering.
More and more large-cash transactions made by certain people in specific periods and fields such as down payments on a house, payments for purchase, cash bonus and dividends.
“China’s large-sum cash management suffers from weak links including limited regulatory coverage and insufficient legal effectiveness, and urgently requires strengthening, ” said PBOC.
A steelworks in Jiangxi Province gave its workers cash bonus.
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To meet the needs of the current situation, strengthen efficacious management of large-sum cash flow and containment of illegal cash usage;
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To establish and optimize the social governance system.
As we mentioned above, the trial will operate in:
According to PBOC Hebei province was selected because its “banking sector financial institutions have comparatively strong foundations for management of large-sum cash operations,” while Zhejiang province and Shenzhen municipality are both “key regions for cash release in China.”
The trials are scheduled to run for a period of two years, kicking off first in Hebei province before launching in Zhejiang province and Shenzhen municipality at an “appropriate time.”
Related measures will be adjusted and optimized during the trial, and finally implemented nationwide.
For corporate accounts, related measures will apply if the amount of funds exceeds 500,000 yuan ($71,625);
For individual accounts, the threshold amount goes to 100,000 yuan ($14,325) in Hebei Province, 300,000 yuan ($42,975) in Zhejiang Province, and 200,000 yuan ($28,650) in Shenzhen.
Registration will be required if the cash amount exceeds 100,000 yuan.
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Cash deposits and withdrawals
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Any usage above exceeding a specific amount each time or accumulatively will be monitored. (The cumulative period is not mentioned.)
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Individual cash operations
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Business accounts and individual accounts related to the same entity
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Cross-border renminbi cash flows
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Establishment of a large-sum cash analytical report system
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Establishment of a large-sum cash monitoring and investigation system
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Formulation of industry and enterprise large-sum cash transaction records and reports
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Individual cash revenue reports
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Large-sum cash cross-border monitoring
Apparently the measures for the management and supervision are not for people’s daily economic activities.
They will not affect the demand for normal and reasonable cash operations of individuals and companies (especially individual businesses), perfectly coordinating with policies of market procurement trade.
Local governments, development and reform departments, fiscal departments, tax departments, finance supervision departments, and other authorities will build a joint supervision system.
Chinese central bank is watching you.
In general, large-sum cash transactions are still allowed, as long as you operate in accordance with the laws and regulations.
But when the measures are implemented, your large-sum operations will be under supervision more or less. So it’s time to pay attention if you use individual accounts in business.
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