Written by Billwilliam
According to Yangtse.com, Communist China is currently tightening up its regulations on single cash withdrawals, deposits, or transactions over 50K RMB or equivalent of over 10K USD. For such cases, financial institutions are required to perform due diligence by keeping records of the customers and their source of funds starting from March 1, 2022. The new restriction is probably a sign that China is now suffering from a cash crunch.
The three agencies the People’s Bank of China, China Banking and Insurance Regulatory Commission, and China Securities Regulatory Commission issued a joint announcement titled “Policy on financial institutions to perform due diligence, to investigate customer’s information, and to keep transaction records.” This policy is ostensibly adopted to combat money laundering or financing of terrorism. This policy applies to the following cases:
Item 10 of the policy: Commercial banks, rural banks, rural credit unions, and township banks are required to verify customer’s identity and ask about the source of funds for single withdrawal or deposit >50K RMB or foreign currency equivalent to >10K USD.
Item 9 of the policy: Single transaction >50K RMB or foreign currency equivalent to >10K USD in cash remittance, exchange of cash bills, the redemption of banknotes, transactions of physical precious metals, or sales of financial products to customers who don’t have accounts by financial institutions such as development financial institutions, policy-supported banks, commercial banks, rural banks, rural credit unions, township banks, and forex agencies.
Item 12 of the policy: Single transaction >50K RMB or >10K USD in sales of financial products to customers who don’t have accounts by securities trading companies, futures trading companies, or securities investment funds.
Item 17 of the policy: Sales of >10K RMB in named or unnamed gift cards by non-bank payment institutions. Or single payment transaction >10K RMB or the foreign currency equivalent of >1000 USD to customers who don’t account in the institutions, or >50K RMB or the foreign currency equivalent of >10K USD in total transactions (including receiving and sending money) in 30 days.
For the cases above, financial institutions are required to perform due diligence to know the customer, to keep records of the customer’s personal information, and to keep records of the customer’s ID certificates.
As the recent tsunami of defaults or bad debt ripples through real estate developers in Communist China, the collapse in the real estate sector is weighing heavily on banks that provide financing to the realtors. Facing severe cash shortage, Communist China has to tighten up its monetary policy to prevent any capital flight. Adding insult to injury, the Beijing Winter Olympics has burnt out much of Communist China’s cash reserve—in pursuit of grandeur, the Chinese Communist Party regime has waived the debt of and even gifted more money to some foreign countries to bribe them into attending the Olympic Game, despite a diplomatic boycott by some Western countries including the United States. Of course, top CCP leadership takes advantage of the enormous foreign donations to launder money into their personal wallets. For example, the CCP leadership gets 90% of its donation to Pakistan in kickbacks while the Pakistani government only keeps 10%. The triple woes of Covid-induced recession, real estate collapse, and huge foreign spending (or severe corruption) have spelled doom for Communist China’s banking sector.
Of course, the launch of the cryptocurrency H-Coin is adding more pressure of capital flight to the CCP, as more people are ditching the worthless RMB and moving funds abroad to safe havens like H-Coin. Some day in the near future, the CCP may have to implement even more tightening to prevent bank runs. The regime’s rule over China will end once it is out of money.