‘Smurfing’ By Chinese Nationals is Causing Real Estate Prices to Go Through The Roof

Posted by Staff Reporter (media@realtytoday.com) on Nov 04, 2015

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CHONGQING, CHINA - SEPTEMBER 29: (CHINA OUT) A general view of buildings under construction near the People's Bank of China office building on September 29, 2007 in Chongqing, China. The People's Bank of China and the China Banking Regulatory Commission have released new rules changing second residential home deposits from 40 percent from 30 percent in a move to curb soaring property prices. 

"Smurfing" or the practice of sending money abroad in small amounts to avoid question by authorities is on the rise and is affecting real estateprices.

Chinese investors and overseas real estate buyers are following the footsteps of international syndicates on how they ship cash abroad. According to Bloomberg, Chinese nationals use "smurfing" or breaking down a large amount of money into smaller transfers to avoid calling the attention of bank officials; money laundering laws require them to report cash transfers that reach or exceed a certain amount which is a deterrent against organized crime groups moving their money.

The term "smurfing" was coined after the small, blue skinned cartoons called "The Smurfs." They are tiny but when they act together, they can do big things effortlessly. In September, there has been an estimated $194 billion that went out from China and entered various places around the world. It is just one of the many ways the Chinese move their money around and a big bulk of the cash has found its way into the real estate markets in cities like Hong Kong, New York, Sydney, and Vancouver where the prices are, according to experts, abnormally high.

This practice is testing the limits of regulators and bankers as they face thedilemma of allowing Chinese investors to bypass their own country's strict money laws and let them in as long as they do not break their host country's banking rules.

Meanwhile, in a report by Newsmax, the number of rich Chinese is continuing to rise and as their country's economy is showing indications of a slowdown, many of them are looking abroad for a way to keep their money safe and well invested. And they are more than willing to break the rules that were set up to keep Chinese wealth inside its borders.