How to Unfreeze Bank Account in China?
Recently, many foreign buyers told us: they have received payment in RMB, but after that their supplier’s bank accounts have been frozen, what should they do?
In the practice, a common situation is that the foreign buyers do not pay the goods to the Chinese suppliers through their company account. Instead, they directly transfer the payment in RMB to the Chinese supplier account through the third parties’ account. This way may be more convenient for foreign buyers, yet there is a risk that this payment method may lead to frozen accounts, and unnecessary disputes.
Lawyer Larry Zhou’s team at Landing (Shenzhen) Law Office kindly reminds you that such risk exists. The Public Security Authority of China has focused on cracking down money laundering, fraud, and other criminal activities. If there is somebody using funds or accounts that are suspected of being illegal, the accounts would likely be frozen.
If a foreign buyer makes payments to a Chinese supplier through a money agent’s account, such transfers are likely to be considered as money laundering by the Public Security Authority of China due to the unknown source of the payments. As a result, the accounts of both the Chinese supplier and third party are frozen.
In such cases, how to unfreeze the bank account?
The answer is you need to prove the legitimacy of the source of the money. You need to do two steps to solve the problem:
Firstly, you need to confirm the authenticity of the frozen account, which means that we need to require the bank to issue a written notice of the frozen accounts.
Secondly, you should provide relevant evidence to the Public Security Authority of China, such as sales contracts, invoices, packing list, BL, communication records, etc. between the foreign buyers and the Chinese suppliers. Only if you provide evidence that proves the transaction is genuine and legitimate, can you request the police authority to release the frozen accounts.
In the future, we advice you to use USD payment as possible, and do not use any third party money agent to settle the payment directly in RMB. Finally, if you have any doubts or questions about this kind of problem, please feel free to contact us.
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