CHINA will introduce an annual cap of 100,000 yuan (US$15,734) on cash withdrawals made through UnionPay cards outside the country from 2016, the nation’s foreign exchange regulator said, to combat money laundering amid concerns about capital flight.

    Cards issued by Visa Inc. and MasterCard Inc. will also be subject to the annual cash withdrawal limit, the State Administration of Foreign Exchange (SAFE) said in a statement.

    The current rule only sets a daily withdrawal limit of 10,000 yuan per card.

    For the last three months of this year, the maximum amount of cash that can be withdrawn overseas using a single card will be 50,000 yuan, the SAFE said.

    The step was aimed at curbing “money laundering risks” after it found some unusual activities among card holders, it said.

    “Recent monitoring found that some UnionPay card holders have made frequent, large cash withdrawals overseas, foreign financial regulators have also alerted on this,” the SAFE said.

    Chinese law prohibits individuals from transferring more than US$50,000 out of the country per year, but overseas cash withdrawals via bank cards provided a regulatory loophole.

    The move coincided with recent steps by China to stem capital outflows. Banks have been told to bolster checks on foreign exchange transactions and identify abnormal cross-border fund transfers.

    Worries over China’s economic slowdown and possible interest rate rises by the U.S. Federal Reserve have led to a wave of capital outflows that intensified after China’s yuan devaluation in August.

    (SD-Agencies)