These Countries May Not Be Able to Transfer Remittances to China

Economic sanctions are a popular way for large governments to exert their disapproval over one another. While wars are costly – both economically and politically – economic sanctions tend to be somewhat less tangible, at least for the country doing the sanctioning. But for the country being sanctioned, the results can be enormous and long-lasting. 

Many expats conduct foreign trade business in China, and high-risk relationships should take serious note of the payment transaction.

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So why can't Chinese banks accept remittances paid in US dollars? 

Because the issue of international trade should not only comply with the relevant laws of our country but should also take into account international practices. Banks are very sensitive when it comes to money transactions coming from high-risk countries. If such transactions were to be found, the parties involved will be penalized and the transactions will be canceled.

Checking method:

1. Let the client pay a deposit to see if the bank can receive the deposit normally. If it is an old customer who has recently transferred money to you, it can be relatively flexible, but the deposit is always a better option because it reduces customer credit risk and can closely follow the changes of overseas sanctions and banking policies.

2. Receivers should check the bank account details. Check the sanction and risk information of the clients you’re dealing with and the paying banks after knowing the objects of clients and paying banks.

Prevention method:

1. It is generally not recommended to move forward with a transaction originating from a sanctioned country;

2. We make arrangements with clients about the remittance bank to avoid unnecessary risks and disputes;

3. Use a ’DP payment method‘ to ensure you’ll be received the amount in US dollar before placing the order.

4. An export credit insurance is necessary as one can transfer the risk over to the insurance company.

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Category 1: Countries sanctioned by the United Nations and/or the United States

Several countries including Iran, Sudan, North Korea, Syria, and Cuba have been sanctioned by the United Nations and/or the United States, therefore most of the domestic banks refuse to deal with any international business conducted by these listed countries.

The full list of sanctioned nations can be found on the official website of the United Nations: https://www.un.org/sc/suborg/zh/sanctions/un-sc-consolidated-list

You may also search: United Nations Security Council Subsidiary Bodies

Website of the United States’ Office of Foreign Assets Control (OFAC)  also featured a list of sanctions: 

http://sanctionssearch.ofac.treas.gov

You may also search: USA Office of Foreign Assets Control (OFAC)

Category 2: Entities that are unilaterally sanctioned by the United States and/or the European Union.

Take Russia as an example. In recent years, the United States and the European Union have adopted a series of sanctions against Russia's defense, financial and energy industries. The survey shows that there are up to 94 Russian banks on the US sanctions list, including the Bank of Moscow, one of the largest banks in Russia.

Website of the United States’ Office of Foreign Assets Control (OFAC)  also featured a list of sanctions: 

http://sanctionssearch.ofac.treas.gov

You may also search: USA Office of Foreign Assets Control (OFAC)

You can access the list of sanctions made by the European Union by visiting the following website: 

http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm

Or by searching: European External Action Service

Category 3: Countries that have not been sanctioned but are suspected of providing sanctioned countries with financial services

For example, countries like the United Arab Emirates (chiefly Dubai, Abu Dhabi, Sharjah and other Sheikh countries), Saudi Arabia and Turkey are suspected of providing financial services for high-risk individuals and organizations (such as Iran, ISIS) and may be checked by the United States. Some Chinese banks will also check by themselves to avoid risk. On July 1st, the strictest new regulations on anti-money laundering were implemented. At the same time, some domestic banks began to scrutinize the remittances of dollars abroad, especially in Turkey and the United Arab Emirates.

Category 4: Unsanctioned countries with high risk

For example, Turkey and Pakistan have been experiencing a lot of socio-political instability domestically, and their relationship with the United States is in trouble, all of which increases their risk of eventually receiving some sorts of sanctions. Our banks are also cautious about doing business with these countries.

A full list of high-risk countries:

Please avoid any remittances coming from any of the above-listed countries! It is better to use Western Union, MoneyGram, or Bank of China's personal account T/T.

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Also note that although any of the following countries may possibly enter into a contractual relationship with another, they will be required to provide banks with the necessary documentation to verify and justify their business. 

Such countries include: 

the UAE, Saudi Arabia, Turkey, Pakistan, Afghanistan, and Turkmenistan.

Required materials include:

1. Anti-money laundering questionnaire;

2. Risk commitment letter;

3. A statement to explain the relationship between the exporter and the payer.

If you fail to receive a payment from North Korea, Iran, Syria, Sudan or Russia into a Bank of China account, the money will be returned the same way it was originally issued.

Source: 宏远国际物流

Supervisor: Crystal Huang

Editor : SC

Proofreader : Ed Bellin

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