China has been strengthening foreign exchange control measures and rectified illegal foreign exchange transactions. China's Supreme People's Court and the Supreme People's Procuratorate have issued relevant measures to manage foreign exchange transactions.
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The amount of illegal transactions has exceeded RMB5 million, those who have earned more than RMB100,000 from the transaction will be convicted as a criminal offense, punished in accordance with the "Illegal Business Crimes", exchange of foreign currency with the help of friends, is also a violation of the law.
The individual exchange limit is still USD50,000 per person per year. The purpose of currency exchange cannot be used to buy a house overseas, buy stocks or buy funds, or buy dividend-type or return-type investment. All bank transfers, Alipay, Baidu Wallet, WeChat and other transfer methods have been already regulated.
According to Chinese media reports, the latest measures clearly stipulate that illegal foreign exchange transactions include buying and selling foreign exchange from underground agents, buying and selling foreign exchange in disguise, disrupting the order of the financial market. Those who are caught in serious cases will be punished according to the "Illegal Business Crime".
"Buying and selling foreign exchange from underground agents" is not difficult to investigate and obtain evidence. The agents wait outside the bank and exchange money with buyers in cash. But "disguised foreign exchange trading" is not that easy to get evidence.
Buying and selling foreign exchange in disguise is common to be found in cross-border transactions. For example, Company A exchanges money with overseas Company B, Company A sends USD10,000 to Company B, and Company B transfer the equivalent RMB to Company A by WeChat, Alipay, or another payment method to a domestic account designated by A, to break the exchange limit of USD50,000 per year.
The measures also stipulate that those who have completed illegal transactions through relevant methods with an amount of more than RMB 5 million, or who has made more than RMB100,000 from the illegal transactions, will be punished according to the "Illegal Business Crime".
The reality we are facing today is that trading is continuously being regulated，not just there in China, but globally. While we can understand the temptation to use "underground banks" the simple fact is that if you are 100% legal and lawful with your business operations and you are paying your taxes then there really is no need to risk your money with the grey market and black market solutions.
