Getting money out of countries with currency exchange restrictions

anticfc

Active Member
A lot of countries have currency restrictions, including countries like China. We know that smart money is leaving China and will stay in USD for example (or CHF), but how do people get money out? Currency restrictions like this exist in many countries all over the globe.

For example, assume a country where each individual is allowed to transfer, say $1000/year abroad without a permit.

- Invoices denominated in foreign currency must be approved individually.
- Gold will be stopped at the airport and confiscated if found.
- The bitcoin exchange market is non-existent because everyone wants to buy btc, and few wants to sell.

What are other options for getting money out?
 

Martin Everson

HNWI Offshore Consultant
Business Angel
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Welcome to the club. :confused:

If your money is stuck inside the country then there is no real legal means to do so. People in China use friends and family to send money offshore. Some use the hawala system. More sophisticated larger clients use the financial markets and conduct mirror trades etc.
 

anticfc

Active Member
How are the financial markets used?

A complex setup would be a set of companies, inside and outside the country in order to generate invoices. Seems risky and expensive though.

Can they buy stakes in foreign companies that suddenly go bankrupt?

How can a Chinese company buy stocks in a company in another country?

I hear art can be used, but how?
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
How are the financial markets used?
How can a Chinese company buy stocks in a company in another country?
See below ;)


----quote start

a Russian company with an owner who, for whatever reason, wants to get roubles out of Russia and exchange them for US dollars in a bank account in an offshore jurisdiction.
  • The Russian company calls up a bank trading desk and buys a quantity of a blue-chip stock, paying in Russian roubles
  • A company in an offshore jurisdiction calls up a trading desk at the same bank. It sells an equivalent amount of the same stock bought by the Russian company, in exchange for US dollars or another reserve currency
  • The two companies are in fact owned by the same individual or parent company
----quote end
 

Marie Manila

Building Trust
Entrepreneur
- The bitcoin exchange market is non-existent because everyone wants to buy btc, and few wants to sell.
At least in the past the bitcoin exchange market was existent in Vietnam.
It was quite easy to send money abroad.

I also found some exchanges in other countries like Iran.

In China you could probably trade via Hong Kong.
 

anticfc

Active Member
See below ;)


----quote start

a Russian company with an owner who, for whatever reason, wants to get roubles out of Russia and exchange them for US dollars in a bank account in an offshore jurisdiction.
  • The Russian company calls up a bank trading desk and buys a quantity of a blue-chip stock, paying in Russian roubles
  • A company in an offshore jurisdiction calls up a trading desk at the same bank. It sells an equivalent amount of the same stock bought by the Russian company, in exchange for US dollars or another reserve currency
  • The two companies are in fact owned by the same individual or parent company
----quote end
Yes I was thinking of something along these lines, but that requires being allowed to hold foreign assets.

I see countries where owning foreign currency is simply not allowed, but I don't understand how business can avoid owning either foreign shares or foreign currency.

In mirror trading, at least the country must allow currency exchange when used to buy foreign assets. I still think those trades will have to go through the central bank for approval.
 

Elitegold7

Active Member
I'm missing something. Where does the selling entity get the stock to sell?
This would be my question too. ABC LLC Moscow bought the Stock in Roubles in Russia. EFG LLC Panama sold the same stock outside Russia in USD or EUR etc. But how did EFG LLC get the stock in the books from ABC LLC? I mean Moscow can not just write it off in the books? Puzzled. An explanation would be nice & interesting.
 

Martin Everson

HNWI Offshore Consultant
Business Angel
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ABC LLC Moscow bought the Stock in Roubles in Russia. EFG LLC Panama sold the same stock outside Russia in USD or EUR etc. But how did EFG LLC get the stock in the books from ABC LLC? I mean Moscow can not just write it off in the books? Puzzled. An explanation would be nice & interesting.
EFG LLC could deliver the equities transferred Free of Payment aka DVF (Delivery Versus Free) to the third-party ABC LLC.

Transferring securities to third-parties is not a problem in private and investment banking and is daily activity. I have donated securities to different organizations on a few occasions. However normal retail brokers won't allow this and transfer has to be in same name.
 

Elitegold7

Active Member
EFG LLC could deliver the equities transferred Free of Payment aka DVF (Delivery Versus Free) to the third-party ABC LLC.

Transferring securities to third-parties is not a problem in private and investment banking and is daily activity. I have donated securities to different organizations on a few occasions. However normal retail brokers won't allow this and transfer has to be in same name.
Apologies if i sound Naive but just trying to figure out a Real life problem.
Lets get more closer to reality. ABC LTD INDIA will buy 10 Million $ worth in INR of Stock of lets say from a Mumbai Based well known Stock Broker and ABC LTD HKG can then sell the stock using the same broker only or through any other broker & get paid in HKD or USD or EUR into the ABC LTD HKG Bank account into HSBC HK? Also will this model work with the Indian company Stock which is traded on Indian Bourses only or does this have to be a stock which is traded in Indian Bourses and lets say LSE or NYSE as well? Do the UOB’s need to be same for both buyer & seller or basically the same name of the entities solves the problem?
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
ABC LTD INDIA will buy 10 Million $ worth in INR of Stock of lets say from a Mumbai Based well known Stock Broker and ABC LTD HKG can then sell the stock using the same broker only or through any other broker & get paid in HKD or USD or EUR into the ABC LTD HKG Bank account into HSBC HK?
Local stockbroker won't work you will need a international bank but in principle yes.

Also will this model work with the Indian company Stock which is traded on Indian Bourses only or does this have to be a stock which is traded in Indian Bourses and lets say LSE or NYSE as well?
You need to be buying ideally foreign stock using INR that is quoted in the foreign currency you want. Then you are just selling that stock offshore and getting back cash in its quoted currency HKD etc.

Do the UOB’s need to be same for both buyer & seller or basically the same name of the entities solves the problem?
Depends on compliance department and how smart they are. If you have currency controls then buyer and seller can't be same. I will post two videos shortly. The guy in video is from India and he will know more specific information perhaps.

P.S I also honestly don't feel comfortable giving out details or talking about activity specifically around securities trading as you don't know whose watching ca#"!.
 

blockchain4ever

Building Trust
Entrepreneur
Maybe this is mirror trading, but I don't think this makes much sense. The books of the company in Russia needs to be adjusted, and this can either happen through default of the traded stock, or if the price goes down.

I don't think these guys trade global 500 stocks.
 

Elitegold7

Active Member
Maybe this is mirror trading, but I don't think this makes much sense. The books of the company in Russia needs to be adjusted, and this can either happen through default of the traded stock, or if the price goes down.

I don't think these guys trade global 500 stocks.
Could be any top 1000 stocks & considering the amounts involved i believe it was not only stocks but derivatives as well. Banks are all in as long as the cat is in the bag. The moment shit hits the roof then they cry foul!
 

blueweb

Corporate Services
Business Angel
Mentor Group
Sorry I don't get it. I know you guys are super clever and know what you are doing so excuse my humble question here.

If you have 2 anonymous BTC each loaded with 10 BTC, wallet 1 is controlled from china and the second controlled from within the UK what will stop the man in China to send 10 BTC to the wallet in the UK as long as we speak crypto?
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
Sorry I don't get it. I know you guys are super clever and know what you are doing so excuse my humble question here.
I learn every day from this forum

If you have 2 anonymous BTC each loaded with 10 BTC, wallet 1 is controlled from china and the second controlled from within the UK what will stop the man in China to send 10 BTC to the wallet in the UK as long as we speak crypto?
Nothing.

Basically people in China are using BTC primarily as a way to evade capital control. They buy BTC locally in local currency (RMB) and then sell it outside China on a foreign exchange for USD - even using the same wallet as it makes no difference. People in Nigeria, Venzuela and other developing countries use crypto this way to get access to foreign currency from outside their home country. In fact some are reliant on crypto as their main means of obtaining foreign currency for their day to day business as banks don't easily convert local currency to foreign currency.

Crypto/Stocks is just the means to move money from one currency across the border and into another currency when your government has capital controls.
 

GiGoGo

I make things happen
Business Angel
Mentor Group
This is how you get money out of China, specifically.
Adding to that one, I'm going to post some more

How they move money from China to Hong Kong?
1. Moving Cash RMB.
You can bring 15.000 USD (or equivalent) per day from China to HK and put in a Bank Account. If this is RMB you can easily convert in any money exchange shop
2. Buying expensive stuff. There's a lot of shops where you can buy gold bars, expensive watches using your Union Pay and sell it minutes later for cash that you can deposit on bank account.
3. Insurance. Come to HK, and buy with your Union Pay expensive retirement or insurance plans. Some people are happy to give you cash loans using your insurance/retirement plan as a collateral
4. Crypto. Probably HK is one of the few places on earth where you can sell 2m USD in Bitcoin and get it with cash without questions. Don't try to do that with a Bank account, but you can slowly deposit this everyday (limit is 100.000 HKD around 13k USD) or just start a business and tell the bank that all the cash is from customers so they can raise the limit.
5. Gold. I heard there's ways to buy gold in Shanghai and use it as collateral for a USD loan in HK.
6. RMB deposit. Deposit 10m RMB in HSBC Shanghai and get a USD loan somewhere else. This requires the bank approval for an international merchant transaction. If you don't return the USD, they get your RMB, that probably is not a problem.
7. Horse racing / Macau Gambling. Similar to the above post.

These are they ways I heard off, probably there are much more. It's not ilegal in HK to find ways to get the money out, the definition of money laundering here is different from China,they are more interested in the source of income but not in the way you get it out. Anyway be very careful on doing this, and please don't follow this ways. This is for educational purposes only.
There's no CRS between Mainland China and Hong Kong. The HK Gov tried to make a move on this matter and weeks later you got the violent protests here
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
6. RMB deposit. Deposit 10m RMB in HSBC Shanghai and get a USD loan somewhere else. This requires the bank approval for an international merchant transaction. If you don't return the USD, they get your RMB, that probably is not a problem.
Yup back to back loans are used a lot. It is also the easiest way oligarchs use their money to buy property in London with no questions asked.
 

hernanday

Well-Known Member
A lot of countries have currency restrictions, including countries like China. We know that smart money is leaving China and will stay in USD for example (or CHF), but how do people get money out? Currency restrictions like this exist in many countries all over the globe.

For example, assume a country where each individual is allowed to transfer, say $1000/year abroad without a permit.

- Invoices denominated in foreign currency must be approved individually.
- Gold will be stopped at the airport and confiscated if found.
- The bitcoin exchange market is non-existent because everyone wants to buy btc, and few wants to sell.

What are other options for getting money out?
My understanding in speaking with a Chinese friend was the following, its $5000 not 1000.
1. Hawala. Basically an informal banking system between a Chinese Hawala and a foreign Hawala (typically also Chinese national of the same klan). You give your Hawala in Beijing $500,000 USD, and then a Hawala in USA basically has your $500k there, you can then stick it into local USA real estate or insurance or stock market.
2. Macau until recently, there was basically a Macau loophole
3. Smurfs, there were companies in China that would basically hire a local Chinese guy to cross the border from China into HK. Pay him like $250 USD, $250 hotel for maybe 2 days, and he gets a free trip to HK. He then deposits the $4500 there in HK where money can move freely. Do that with like 500 people and you are moving like 2.2 million a week
4. They also use corporations buying large equipment. For instance, Chinese national will claim they are buying equpment from America, jack up the price from America, then claim they are buying it from there. Ie. China Co Airplane owned by Chen Chin, he then sets up a company through a Chinese/Hong Kong multinational law firm in USA called USA Airplane Parts Co. USA Airplane sells $2 million in parts to China Co. China Co writes check with permission fromChinese government who wants China to manufacture airplanes so approves it. USA Airplane Parts Co. gets check for $2 million and continues to get it until Chinese national can eventually travel out or immigrate out.
 
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