Pilot Project of Large-sum Cash Transaction Management from July 2020
The People’s Bank of China released a Circular on a Pilot Project of Large-sum Transaction Management on the 13th May 2020. It specifies a trail will take place in Hebei province from July, Zhejiang province and Shenzhen city from October. According to central bank’s statistics, an ascending market demand on cash (especially cash in large amount) appears even when mobile and software transactions are as prevailing as present. Relatively speaking, cash transaction features anonymous and traceless. It shadows regulatory supervision and fragments cash flow. Further creates threat of corruption, tax evasion and other financial crime, as well as underground economic activities. It weakens national economy and financial safety. In order to combat such threats, China is in need to establish a cash management system for large amount transactions. So that to optimise cash circulation environment, improve social resource efficiencies, prohibit financial crime, minimise and prevent risks.
- Scope and object of the management
The large-sum transaction management targets on cash substance counter transactions (including cash dispensing machine) above certain amounts.
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Account Type
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Area
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Threshold Amount
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Corporate account
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Hebei and Zhejiang province, Shenzhen city
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RMB500,000
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Personal
account
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Hebei province
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RMB300,000
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Zhejiang province and Shenzhen city
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RMB200,000
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Banks will impose management on cash split, concealed posting and other transactions concerning dodging supervision, false large amount of transactions. Monitoring lump sum transactions exceed threshold amounts as well as accumulatively. The management includes both cash and bank transactions. It covers corporate to corporate, corporate to individual, individual to individual, with reference to the Measures for the Administration on Financial Institutions?Reports of Large-sum Transactions and Doubtful Transaction (regulation by PBC 2013 No.3).
- Management policy
(1)
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Appointment and registration for large-sum transaction
One must make an appointment for cash withdrawals exceed the threshold amount. The large-sum cash withdrawn shall be registered. Banks should report these appointments and their form of transactions to the PBC. Meantime, for traceability, banks need to make sure that the recorded transaction detail aligns to the unique number displayed on the cash notes. In other words, for cash deposits and withdraws exceed the threshold amount, the involved individual, time and place will be aligned to the unique number displayed on the cash notes.
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(2)
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Level check, prevent risk
Banks shall classify transactions in intervals and by industries when apply level checks. For risky industry and sectors, a thorough integrity and normative check shall be applied to frequent abnormal massive amount transactions made by mismatched clients. If money laundry activities are found or reasonable doubt is suspected, banks should file Doubtful Transaction Reports to the PBC. So that further risk labelling or follow up can be conducted accordingly.
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(3)
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File and analysis, information share
All major banks shall file information to the PBC, including but not limited to cash withdraw appointment, deposit and withdraw registration, level check and risk factors of large-sum transactions. The PBC then classify this filed information by industry and sector, intention and amount for analysis, in order to hold a pattern of large-sum cash flows, estimate potential risks, communicate with relevant department and share information. For instance, co-operation of tax authority, police and banks in some areas. Police can monitor bank accounts of taxpayers, react on it with tax authorities once abnormal event happens.
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(4)
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Special supervision on certain industry and in certain area
Supervision in Hebei province focuses on real estate sector. In particular, deposit for commodity housing in Xingtai city.
Supervision in Zhejiang province focuses on retail, real estate sale, construction and vehicle sale sector. In particular, the integrity and subsequent cash flow conditions.
Supervision in Shenzhen city focuses on personal accounts transactions relates to business operations.
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This unpresidential large-sum transaction management is under spotlight. Regulation on information sharing is at deterrence. Nonetheless, the freedom of public cash deposit and withdrawal is guaranteed prior to legal enforcement. Privacy of the general public as well as companies remains protected. No noticeable impact will be detected once registration is made.
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