Date
21 August 2017
Mr Wealthy can use deposit cards to buy gaming chips in Macau casinos, and get the cash in foreign currency back with the help of agents. Photo: Bloomberg
Mr Wealthy can use deposit cards to buy gaming chips in Macau casinos, and get the cash in foreign currency back with the help of agents. Photo: Bloomberg

The 10 mln yuan question: How to ship wealth offshore

Imagine a businessman — let’s call him Mr Wealthy — with 10 million yuan (US$1.62 million) cluttering up his bank account on the mainland. He wants to get the cash offshore but government rules prevent him from taking any more than the equivalent of US$50,000 out of the country in any one year. What is he to do?

According to a China Business News column Thursday, Mr Wealthy has at least four options. He can avail himself of underground banks, private currency exchange agents, foreign trade companies, or casinos in Macau. Each one can do the job but each one has its drawbacks.

The most common route is an underground bank, an illegal operation running under the cover of something like “Blabla Commercial Bank”, “Blabla Investment Co.Ltd” or “Blabla Immigration Service Agency”, it said. The underground banks have both onshore and offshore capital pools and after the client deposits yuan into their onshore accounts, the “bank” will give the client a key to an offshore account with the equivalent amount of foreign currency, and vice versa. The “banks” need to big enough on both sides of the border to ensure it can balance inflows and outflows.

It can be an effective option but Mr Wealthy hesitates — not only are service charges high, there’s a chance the outfit will disappear with his cash. With no way to complain he will be left high and dry without the money.

A cheaper way is to go through a private currency exchange agent to use a “human wave” to get the money across the border. A source told the newspaper that their methods are very simple—they break up the whole into parts and do the transaction through numerous real personal accounts, taking days or weeks to complete the deal.  Mr Wealthy says no. “I’d rather find my relatives to do this for me,” he jokes.

To his surprise, Mr Wealthy finds that some legitimate foreign trade companies also offer to ship out cash under the table. Mr Wealthy’s friend says he can put him in touch with a company that is willing to do a fake import/export trade for him. The company does it by raising the price of certain export product and selling the order to its subsidiary across the line, allowing Mr Wealthy to collect it on the other side. But the company only promises to get the money to Hong Kong and not farther afield.  

Mr Wealthy’s other choice is to head to a place with a wealth of choices for laundering money—Macau. He can use deposit cards to buy gaming chips in VIP rooms in the casinos, and get the cash in foreign currency back with the help of agents. Or he can buy luxury goods by card and cash them in at pawnshops in the casinos. His friend even suggested hiring a smuggler to take the money by boat into the enclave. Who knows how viable these methods are but a crackdown by Macau’s monetary authority on money laundering at casinos suggests that may be some of them are being used.

Let’s hope Mr Wealthy can find a legal way out of his dilemma.

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