Sat, Feb 06, 2016 - Page 14 News List

Chinese insurance curb extended to Visa, MasterCard

Bloomberg

The Chinese crackdown on the flow of funds into insurance products in Hong Kong has been extended to global credit-card firms Visa Inc and MasterCard Inc.

Domestic banks that issue the two providers’ cards will now be required to impose a US$5,000 cap on insurance purchases made overseas using the cards, the State Administration of Foreign Exchange (SAFE) said in a statement yesterday.

China UnionPay Co (中國銀聯) bankcard holders are already subject to the same limit, and the regulator will “closely monitor” cardholders and insurers in cases where cards have been swiped multiple times, SAFE said.

The restriction complies with the nation’s capital-account curbs, while allowing Chinese to fulfill a “reasonable demand” for insurance policies of a low amount, SAFE said. There is no change to rules that place insurers in the “limited” merchants category, which is subject to the purchase cap, the regulator said.

The move comes as China steps up administrative measures to slow capital outflows.

The tightening marked a reversal after years of easing that spurred global use of the yuan, a trend that turned on China when speculative bets against the currency offshore jumped.

Using UnionPay credit and debits cards enabled hundreds of thousands of Chinese to get around the nation’s controls that limit citizens to converting no more than US$50,000 per year and sending it abroad. By swiping the cards at insurers in Hong Kong, mainland residents bought policies denominated in Hong Kong dollars and US dollars — averaging US$50,000, but reaching US$1 million or more — with the equivalent in yuan deducted from their accounts back home.

The money could then be cashed out and sent anywhere in the world as a clean source of funds from an insurance policy. Such policies, in addition to providing better healthcare, beneficiary payments and returns than those in mainland China, are also popular because they are shielded from seizure.

This story has been viewed 2363 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top