Global transfers 2023: guide to foreign exchange control and restrictions for various countries
As the world's largest offshore Chinese Yuan (CNY) center, Hong Kong is the preferred hub for commercial remittances for both large corporations and small-to-medium enterprises. Naturally, the government has implemented regulations governing activities such as entering and existing with foreign currency, overseas cash withdrawals, online remittances, and more. If your company requires periodic remittances to Mainland China, the US, or Canada, this article can help you understand the FX regulations and other important information regarding remittance amount limits.
Transferring to Mainland China
Hong Kong has close trade relations with Mainland China, and small and medium-sized business owners often need to make remittances to the Mainland to pay suppliers in CNY or other currencies. However, China imposes foreign exchange controls on both domestic and foreign companies and individuals. It is important to be cautious when making remittances to avoid unnecessary complications.
China's foreign exchange control
In general, countries implement foreign exchange control regulations to stabilize the financial market, prevent market turmoil, and reduce the opportunity for businesses to disrupt financial order through the foreign exchange (FX) market.
According to the foreign exchange control regulations, China divides FX receipts and payments into current and capital accounts transactions. Current accounts transactions cover general Balance of Payments (BoP) related to trade in goods and services that are generally not restricted. The requirements under the Compulsory Foreign Exchange Settlement* were also abolished. On the other hand, capital accounts transactions refer to capital transfers, investments, loans, securities, etc., which still have some restrictions but have been gradually relaxed since 2000.
As for FX rates, the foreign exchange control regulations also outlined the system for managing floating exchange rates. The China Foreign Exchange Trade System (CFETS) makes price inquiries with all market makers in the inter‑bank FX market before the market opens every business day. Once the highest and lowest quotations are eliminated, the remaining prices are weighted and averaged out to arrive at the central parity rate of CNY against USD of that day.
* Foreign exchange settlement refers to the process where the recipient of FX is required to sell the foreign currency to a designated bank in exchange for an equivalent amount in CNY at the prevailing exchange rate. With the abolishment of the mandatory foreign exchange settlement, businesses can retain foreign currency based on operational needs without being forced to sell and convert it back to CNY.
Restrictions on the entry and exit of CNY
Regardless of whether you are a Chinese citizen or a foreigner, you can carry a maximum of CNY ¥20,000 each time per person per entry. Mailing of CNY is prohibited in China.
If you plan to exchange your currency for CNY in Mainland China, the limit for foreign cash is USD $5,000. If the amount exceeds the limit, you will need to apply for the Permit for Carrying Foreign Currency Cash to Enter and Exit the Territory from a designated bank. It is important to note that the limit may be adjusted based on the frequency of entry and exit. If you enter and exit the country twice within 15 days, the limit will be reduced to USD $1,000.
What are the restrictions on commercial remittances to Mainland China?
There are two options for commercial remittances to Mainland China: one is to directly remit in CNY, and the other is to make a transfer in foreign currency.
1. Remit in CNY
For businesses that wish to make direct remittances in CNY, it is important to register for the Mainland Chinese company and understand the distinction between onshore Chinese Yuan (CNY) and offshore Chinese Yuan (CNH).
Although CNY and CNH are both Chinese Yuan and there is no need for mutual exchange, Hong Kong banks can only handle transactions involving offshore CNH. The currency needs to be converted to onshore CNY before the payment can be processed to Mainland China.
Furthermore, there are strict foreign exchange controls and regulations regarding CNY. CNH is relatively more freely traded and susceptible to international financial market influences, hence the differences in exchange rates between the two. Companies should consider these factors to minimize the cost of currency conversion.
2. Remit in foreign currency
Commercial remittances with foreign currencies are not subject to foreign exchange control restrictions if they fall under current account transactions.
Maximum amount for remitting to CNY to Mainland China
As long as you are aware of the distinction between onshore CNY and offshore CNH, there are no restrictions on the remittance limit when remitting CNY from a Hong Kong company account to a Mainland Chinese company account.
However, in order to comply with the Guidelines on Foreign Exchange Administration for Trade in Services, additional transaction proof and documentation may be required if a single remittance exceeds USD $50,000.
As for personal accounts, the daily limit for CNY transfers is ¥80,000 per person.
Who can receive commercial CNY remittances?
In addition to transferring to Mainland Chinese companies, the People's Bank of China has expanded the scope of cross-border CNY transfer business since 2018. Qualified enterprises can transfer CNY to individual Mainland Chinese accounts for payroll, family transfers, shareholder dividends, and more.
Please note that this measure applies only to commercial accounts. If you wish to transfer CNY to a personal account, it can only be done to a personal account with the same name at a Mainland Chinese bank, and funds cannot be sent to friends or relatives in Mainland China.
How to pay for remittances in CNY?
With an Airwallex multi-currency Global Account, you can easily make online transfers using your CNY balance.
You can also make payments with your bank account in China, but you must meet the following conditions for using Chinese yuan as the source currency:
You do not hold a Mainland Chinese passport (including Taiwan, Hong Kong, and Macau residents).
You earned income in Mainland China after January 2019 and have already paid taxes on that income.
According to regulatory requirements, you can only transfer CNY from China to another account under your name. Once you have completed all the necessary procedures, you will receive your dedicated payment details to proceed with the remittance.
Information required to transfer to banks in Mainland China
If you are making an overseas remittance in CNY for the first time, the receiving company in Mainland China needs to register through the local settlement bank in the Renminbi Cross-Border Payment and Receipt Management Information System (RCPMIS).
When filling in the payment information, Hong Kong companies should take note of the following:
Fill in the SWIFT code in the receiving bank field
The payment currency should be onshore CNY
Provide a description of the payment purpose, such as pre-payment for goods or investment.
Chinese companies need to provide receipt instructions and submit the required supporting documents to the receiving bank in order to receive funds. Documents required may vary depending on the payment purpose and receiving bank. It is recommended to inquire with the receiving bank in advance to find out more before proceeding with the remittance.
Transferring to the US
Controls on international remittance to the US
The US has no foreign exchange controls. Funds can enter and exit freely without any declaration.
Restrictions on inbound and outbound transfers of USD
If you make an online remittance, please note that you cannot transfer USD to brokers or intermediary banks. The recipient must have a checking or savings account as well.
Maximum amount for remitting to the US
If you hold an Airwallex multi-currency Global Account, the single transaction limit for remittance to the US is USD $250,000. Otherwise, the limit may vary if you choose to go with traditional banks or other remittance service providers. Traditional banks may charge additional fees for large remittances.
How to pay for remittances in USD?
With an Airwallex multi-currency Global Account, you can easily make online transfers using your USD balance, saving up to 99% in transaction fees.
You can also transfer with any US bank account through the following ways:
Automated Clearing House (ACH)
Debit card / credit card
Please note that you cannot use debit cards or credit cards for payment if the address associated with your US account is in Nevada, Guam, or the Virgin Islands.
Information required to remit to the US
In general, you will need the following information to transfer to US:
Full name of the recipient
Complete address (PO Box addresses are not accepted)
Bank account number
ACH or ABA number
How long does it take for an online banking transfer to the US?
If you choose to make the online remittance through Airwallex, the funds usually can be credited within 2 business days.
On the other hand, If you choose to go with traditional wire transfer, it generally takes 3-5 business days or up to 2 weeks for the funds to be credited given the time difference. Wire transfers are also more expensive than online transfers and may incur additional fees.
Transferring to Canada
Controls on international remittance to Canada
Canada adheres to a free trade system and does not have foreign exchange controls. There are no income taxes or gift taxes imposed on remittances.
Restrictions on inbound and outbound transfers of Canadian dollars (CAD)
The Canadian government actively works to reduce the difficulty of overseas remittances, so there are generally no particular restrictions on the inbound and outbound transfers of CAD. You can easily remit CAD to any bank account within Canada. The only thing to note is that you cannot remit funds to brokers or intermediary banks.
Maximum amount for remitting to Canada
If you hold an Airwallex multi-currency Global Account, the single transaction limit for remittance to Canada is CAD $100,000.
You can also make transfers to Canada using Interac with email, with a maximum limit of CAD $ 25,000. However, the limit may vary depending on different banks and remittance service providers. Traditional banks may charge additional fees for large remittances.
How to pay for remittances in CAD?
With an Airwallex multi-currency Global Account, you can easily make online transfers using your CAD balance, saving up to 99% in transaction fees, and the funds can be credited within as fast as one business day.
You can also make payments from any bank account in Canada using the following methods:
Online bill payment
Debit card / credit card
Information required to transfer to Canada
In general, you will need the following information to make a remittance to Canada:
Full name of the recipient
3-digit Bank Institution Number
5-digit Transit Number
7-12 digit account number (without spaces)
Please note that If your recipient holds a bank account that supports Interac, you can use their registered email address to initiate the remittance.
Airwallex — the instant online remittance financial technology
Bypass cumbersome procedures of traditional remittance
With an Airwallex's Global Multi-currency Account, you can make transfers worldwide without dealing with the complex requirements and processes of different banks.
Global network for faster transfers
Airwallex has partnerships with over 60 banks and financial institutions over the world. International transfers and transferring to Mainland China are as convenient as local transfers, and funds can be credited within as fast as one business day.
Save up to 99% on transaction fees
Airwallex charges fees as low as 0.2% above the interbank rate. There are no service fees, monthly charges or hidden fees involved.
What are the options for international remittances?
You can choose from the following methods for international transfers:
1. Traditional Wire Transfer
2. Credit Card / debit card
3. Financial platforms like Airwallex
To choose the most suitable method, you should consider factors such as cost, processing time, global coverage, and customer service.
Airwallex's remittance service covers over 150 countries or regions worldwide and supports more than 46 currencies. They charge fees as low as 0.2% above the interbank rate without hidden charges or monthly service fees. Depending on the recipient's location, online transfers through Airwallex can be credited as fast as within one business day.
How long does it usually take for an online banking transfer to be processed?
For online transfer through Airwallex, the funds are generally credited within one business day.
If you choose to make a traditional wire transfer, funds are credited in 3-5 business days or even up to 2 weeks due to factors such as time zone differences and the complexity of intermediary banks involved. Wire transfers also incur higher fees and transaction charges compared to online transfers.