China’s Large Fund Control Policy and Cross-Border E-Commerce Compliance Operation Guide

Regulations on the Management of Large-Amount Fund Transactions

In order to strengthen the regulation of reporting of large-value transactions and suspicious transactions by financial institutions, the People’s Bank of China has formulated the “Administrative Measures for Reporting of Large-Amount and Suspicious Transactions by Financial Institutions” (hereinafter referred to as the “Administrative Measures”) in accordance with relevant laws and regulations. According to the “Administrative Measures”, large-value transactions that financial institutions need to report include but are not limited to:

• A single or cumulative transaction on the same day is a cash transaction of more than RMB 50,000 (including RMB 50,000) or a foreign currency equivalent of more than US$10,000.
• A single or cumulative transaction of more than 2 million yuan (including 2 million yuan) or a foreign currency equivalent of more than 200,000 US dollars is transferred between the bank account of a non-natural person customer and other bank accounts on the same day.
• A single or accumulated transaction of more than RMB 500,000 (including RMB 500,000) or a foreign currency equivalent of more than US$100,000 in domestic transfers on the same day occurs between the bank account of a natural person customer and other bank accounts.
• A single or cumulative transaction of more than RMB 200,000 (including RMB 200,000) or a foreign currency equivalent of more than US$10,000 in cross-border transfers on the same day occurs between the bank account of a natural person customer and other bank accounts.

Large Amount Cash Management Pilot

In order to further implement the central government’s decision-making and deployment and promote large-amount cash management, the People’s Bank of China decided to launch large-amount cash management pilot projects in Hebei Province, Zhejiang Province, and Shenzhen City. The pilot will last for 2 years and will be first implemented in Hebei Province and then extended to Zhejiang Province and Shenzhen City. The starting point for the specific management amount is as follows:

• The starting amount for corporate account management is 500,000 yuan.
• The starting points for private account management amounts are: 100,000 yuan in Hebei Province, 300,000 yuan in Zhejiang Province, and 200,000 yuan in Shenzhen City.

Compliance handling of cross-border e-commerce funds

Coping strategies when the risk control audit fails

When a buyer’s order is closed due to failure in risk control review, the seller should proactively contact the buyer to inform them to place a new order and suggest other payment methods. For example:

Dear Customer,
I am sorry to inform you that your order has been canceled due to credit card approval issues. If you still wish to purchase the item, please place a new order using alternative payment methods such as Western Union or T/T.

Follow-up actions after approval

Once the order passes the risk control review, the seller should promptly confirm the details with the buyer and arrange delivery as soon as possible. A sample notification is as follows:

Dear Valuable Customer,
Thank you for your order and prompt payment. Your item will be dispatched within 24-48 hours. Please verify that your address, postcode, and phone number are correct.

E-commerce platform fund deposit compliance issues

With the development of cross-border e-commerce, the “large merchant settlement” model may lead to capital precipitation problems. In this model, the buyer’s payment is first aggregated into the e-commerce platform account, and then distributed by the platform to various merchants, which is the so-called “second clearing” phenomenon. In order to avoid compliance risks, e-commerce platforms should consider collecting payments directly to banks or third-party payment institutions holding payment licenses.

Conclusion

Whether it is the regulations on the management of large-amount capital transactions or the large-amount cash management pilots, they all reflect my country’s determination to conduct comprehensive and systematic management of large-amount capital flows. For cross-border e-commerce, it is crucial to understand and comply with relevant laws and regulations, which can help avoid potential risks and ensure the safety of corporate funds.