Try buying a house with 50k a year... This is exactly what the "scheme" solves. You have new immigrants who have (in many cases) legitimate money (e.g. by selling property back in china) but cannot move it out of the country quickly due to capital controls on the chinese side.
Since mortgages are meant to spread out costs over time, it's the perfect solution. However, banks (understandably) care about income rather than existing capital. So you have a lot of "safe" customers who are unlikely to default
and less sensitive to interest rates (compared to the local borrower pool), and banks looking for customers amidst high interest rates... You can see how something like this can easily arise from these conditions...
> you don’t need money laundering to get money out of china into the USA
I cannot comment on what your situation was (maybe through a business?), but AFAIK it is very hard to move capital out for regular individuals. Your realistic options to wire out capital are just "education" and "tourism". While technically you can claim "investment", it will almost always not be approved and cause a watch to be put on all your accounts.
That being said, usually documentation of the funds outside of china is completely legitimate and above board. There is no need to fake this. The only paperwork magic that needs to happen is towards the chines government... However, it still _looks_ like money laundering because you can only wire $50k a year, so many need to resort to wiring from accounts of different individuals (friends and family) to different individuals, despite the funds already being fully documented and reported outside china.
Foreigners on Z visas can wire out whatever they earn, so for me it wasn’t an issue. There are even foreigners who rent out some of their allocations since you always have PRC expenses, but this is of course illegal.
I used my wife’s $50k allocation once because I was held up by some paper work (you need a lot of paper work, notarized, etc…). They didn’t ask any questions about what it would be used for, but this was 2016, and they changed the rules a few months later.
Foreigners are not fully exposed to the local market though, so there's no need to do capital controls. _Income_ is never an issue, as there are taxes to cover that. The main thing being cracked down on is people moving accumulated _wealth_ out.
Also, things have changed _considerably_ since 2016 (as these things tend to do). Indeed, nobody --- foreign or domestic --- needed to document use as long as you stayed within the $50k (you would be asked to if you went above that). Later it became a mandatory question, but wasn't enforced. These days it is enforced rather strictly. If you claim education, you need to provide statements of tuition and housing etc. For tourism there's similar requirements, and usually they limit discretionary spending budgets to ~$10k.
Try buying a house with 50k a year... This is exactly what the "scheme" solves. You have new immigrants who have (in many cases) legitimate money (e.g. by selling property back in china) but cannot move it out of the country quickly due to capital controls on the chinese side.
Since mortgages are meant to spread out costs over time, it's the perfect solution. However, banks (understandably) care about income rather than existing capital. So you have a lot of "safe" customers who are unlikely to default and less sensitive to interest rates (compared to the local borrower pool), and banks looking for customers amidst high interest rates... You can see how something like this can easily arise from these conditions...
> you don’t need money laundering to get money out of china into the USA
I cannot comment on what your situation was (maybe through a business?), but AFAIK it is very hard to move capital out for regular individuals. Your realistic options to wire out capital are just "education" and "tourism". While technically you can claim "investment", it will almost always not be approved and cause a watch to be put on all your accounts.
That being said, usually documentation of the funds outside of china is completely legitimate and above board. There is no need to fake this. The only paperwork magic that needs to happen is towards the chines government... However, it still _looks_ like money laundering because you can only wire $50k a year, so many need to resort to wiring from accounts of different individuals (friends and family) to different individuals, despite the funds already being fully documented and reported outside china.