Source of funds for matters with Chinese nexus

China limits the amount of cash Chinese residents can send out of China to $50k per year. To defeat these limits, some residents use an underground banking system run by Chinese criminals.

Removing more than $50,000 from China is unlawful in China, but not in the UK and using intermediaries to defeat a Chinese law is also not unlawful in the UK. So long as the client can show you how it brought the funds to England in compliance with English law then you don't have any concerns.

The risk though is that the client might use means which are unlawful in the UK to bring money to the UK. Clients may use organised criminals to deceive the UK banking system and break UK law. If you are aware that this might be a possibility then you should not accept funds.

If the funds are wholly generated in Hong Kong in HKD by a Hong Kong resident (or similar for Macau, Taiwan and similar overseas territories), then it is likely Chinese currency controls around yuan will not apply. However, any individual concerned about and potentially caught by the regulations should seek legal advice from a Chinese specialist lawyer.

If you have a matter with a connection to China, where funds in excess of US$150k are being provided by our client, then you must be satisfied that Chinese underground banking has not been used. You should note on your file why you are satisfied.

If you are in doubt, you should consider any/all of:

1. Calling the MLRO or Director of Operations and Compliance for advice;
2. Asking the client to provide you with details as to where the funds were sent from (if they were not sent from China, directly or indirectly, then there is no issue);
3. Asking the client how the funds were accrued (if accrued outside of China and not sent back to China first, then there is no issue).

If you are not convinced with the answers you are given, you should contact the MLRO or Director of Operations and Compliance.