Transferring Assets Abroad
Emboldened by repeated surpluses in the international balance of payments，strong foreign exchange reserves in the years immediately after China’s entry into the World Trade Organization，and the rising needs of individual property rights protection，in 2004 the People’s Bank of China unveiled the Announcement for the Administration of Purchase and Payment of Foreign Exchanges Due to Transfer of Individual Properties to the Outside of China [PBOC Announcement No. 16，(2004) ]，providing a legal channel for individuals to transfer their assets outside of China.
From the perspective of policy implementation，the key aspect of managing foreign exchange transfers related to individual assets is the proper identification of the applicant and the legitimacy of the ownership of the assets. The following article examines some typical issues regarding the transfer of assets offshore.
Determining Immigrant Status
Case #1. Individual A is a shareholder in a company in China. The same individual obtained a Hong Kong permanent identity card in 2007 and mainland travel permits for Hong Kong and Macau residents in 2017. The same person now hopes to remit dividends obtained between 2011 and 2017 to Hong Kong via a bank transfer.
The Notice of the People’s Bank of China on Improving Individual Bank Account Services and Strengthening Account Management [PBOC Document，No. 392 (2015) ] states the following as to determining identification: “When opening an individual bank account for the account opening applicant，the bank shall require the applicant to provide his or her own valid identity certificate...If it is still difficult for the bank to determine the identity of the account opening applicant through the valid identity certificate，the bank shall require the applicant to provide supplementary identification materials.” It goes on to say that “a valid identity certificate includes...the mainland travel permit for Hong Kong or Macau residents，if the applicant is a resident in the Hong Kong Special Administrative Region or Macau Special Administrative Region... Supplementary identification materials shall include，but not be limited to the resident identity card of the Hong Kong Special Administrative Region or the Macau Special Administrative Region，if the applicant is a resident in the respective region...” On this basis，a mainland travel permit for Hong Kong or Macau residents is recognized as a valid identity certificate，while the resident identity card of Hong Kong or Macau is considered supplementary identification material. Therefore，a bank should be able to handle A’s property transfer application based on the travel permit alone.
Suggestions
The mainland travel permit for Hong Kong and Macau residents，also known as a home-visit permit，is issued by the Exit-Entry Administration of the Ministry of Public Security of the People’s Republic of China. It is used by Hong Kong and Macau residents to travel to the mainland. To apply for this permit，applicants need only submit photos and ID cards. Document No. 392 considers a travel permit as a valid identity certificate. However，regarding property transfers，it is more reasonable to use the Hong Kong permanent resident identity card to determine an applicant’s residency status.
Transferring Insurance Payments Abroad
Case #2. Individual B，who purchased personal accident insurance in 2018，made his or her son X as the beneficiary (X obtained permanent residency abroad in 2017). B died in an accident and insurance benefits were paid to X by the insurance company. X then wanted to remit this sum abroad.
Case #3. Individual C，who purchased health insurance in 2004，made his or her daughter Y as the beneficiary (Y obtained foreign nationality in 2019). In 2018，individual C received treatment in hospital for an illness. The insurance company paid Y a sum of insurance benefits，which Y hoped to remit abroad.
Case #4. Individual D bought life insurance in 2002 and made his or her daughter Z as the beneficiary (Z obtained foreign nationality in 2015). Individual D died in 2019，and an insurance benefit was paid to Z，who hoped to remit the funds abroad.
Foreign exchange management divides insurance into two categories: one is service trade transactions，such as personal accident insurance and medical insurance. The other is financial and capital transactions，which covers life insurance and insurance with investment returns. Thus，the insurance benefits paid to X under personal accident insurance in Case #2 is considered service trade income，and therefore can be remitted abroad through a bank. Z’s insurance benefits paid under a life insurance policy belongs to financial and capital account earnings. For Y in Case #3，whose benefits come from health insurance，the insurance type should be further verified to determine the remittance method: if it is a non-refundable insurance，the benefits are considered service trade income，and can be remitted abroad directly. If they are from a refundable insurance，then the benefits would be considered as financial and capital account income.
How to determine the time of receipt of benefits is a key issue in transferring financial and capital account income abroad. If we define the time of obtaining benefits as when the purchase of the insurance was made，both Y and Z in Cases #3 and #4 have the right to remit these funds abroad. However，if we define the time of obtaining the benefits as when the payment was made，then Z is not eligible for immigration transfer since her foreign nationality – which was obtained in 2015 – predates the 2019 payment. Additionally，since Z is the direct beneficiary of the insurance，this case is not treated as an inheritance and there is no reasonable basis for Z to transfer this sum of money.
Suggestions
The China Insurance Regulatory Commission and the China Banking Regulatory Commission have strict regulatory requirements on insurance products and sales. Insurance companies normally use standardized contracts and follow a well-established claim compensation process. It is not possible for the insurer to collude with the insured individuals or beneficiaries in a fraudulent scheme. Insurance is therefore less likely to be a channel for improper property transfers. To ensure overseas insurance benefits transfers can be made smoothly，it is suggested that，if both the insured and the beneficiary are domestic residents，and the premiums are paid in China，authorities should further clarify the policy as soon as possible and take the time of the purchase of insurance as the effective time of the benefits.
Funds from the Sale of a Home
Case #5. Individual E，who owned domestic real estate before immigration，sold the property and hoped to remit the proceeds overseas. However，there is no buyer’s signature on the online contract.
Let’s take sales of existing homes in Beijing as an example. The buyer and seller in a transaction will first sign a Beijing Stock House Sale and Purchase Contract with a broker. After it is determined that the transaction is between qualified parties，the buyer and seller sign a Beijing Stock House Sale and Purchase Contract and complete online filing (normally referred to as “online signing”). Next，aft