(Bloomberg) -- China plans to step up its monitoring of how citizens use their annual quota for changing yuan into foreign currencies, according to four people familiar with the matter.
The State Administration of Foreign Exchange will require extra documentation for people seeking to sell yuan from Jan. 1, while keeping each person's annual $50,000 allowance unchanged, said the people, who asked not to be identified as they're not allowed to speak publicly. Banks will be asked to increase scrutiny of transactions, they said.
At present, there is no change to the current policy regarding foreign exchange purchases by individuals, SAFE said in a statement to Bloomberg News. Individuals need identification cards to buy foreign exchange at banks within their annual quota, and if the purchase value exceeds annual quotas, they must also provide documents to verify the transaction value, the administration said.
The annual limit for individuals resets for the year on Jan. 1, potentially aggravating capital outflow pressures that have already been intensifying after the yuan suffered its steepest annual slump in more than two decades. An estimated $689 billion flowed out of the country in the first 10 months of 2016, according to a Bloomberg Intelligence gauge.
The People's Bank of China said Friday it will require financial institutions to report any cross-border transfers of 200,000 yuan ($28,800) or more starting July 1, as part of new efforts to curb money laundering. Regulators say they want more timely data on individuals to track risks arising from increasing cross-border transfers, according to a statement.
China's foreign reserves, the world's largest stockpile, fell to a five-year low of $3.05 trillion as of November. The $99 billion drop in January, the largest in 2016, followed the last reset of the controls. Data scheduled for release on Jan. 7 will show the hoard fell to $3.01 trillion, according to the median estimate of economists surveyed by Bloomberg.
--With assistance from Jun Luo and Karen Zhang To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net, Ran Li in Beijing at rli279@bloomberg.net, Steven Yang in Beijing at kyang74@bloomberg.net. To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Steve Geimann
With assistance from Ran Li, Helen Sun, Steven Yang
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