China will further tighten controls on individuals' foreign currency purchases to try to curb massive capital flight from the country as the yuan falls sharply against the dollar.

Individuals wishing to convert yuan to foreign currencies will now have to provide more detailed information to their bank, including an explanation of the funds concerned in addition to their identity papers, said the State Administration of Foreign Exchange (SAFE).

Each year individuals can convert up to the equivalent of $50,000, a maximum sum that will not change, it said on its website. 

The tighter controls are aimed at preventing attempts to circumvent this quota. 

The idea is to "combat illegal transactions, money-laundering and clandestine banks", the agency said, vowing to multiply random checks and toughen its sanctions. 

Banks must verify the authenticity of the information provided. In addition, from July, financial institutions will have to report to the central bank any international transfer exceeding 200,000 yuan ($28,800), in order to fight laundering, the central bank announced Friday. 

The tighter controls are part of an array of measures taken by the Communist government to curb huge capital outflows. 

The equivalent of about one trillion dollars was transferred out of China in 2015 and another $690 billion in the first ten months of 2016, according to Bloomberg Intelligence estimates. 

Slower growth in China, the weakness of the yuan and the recent rise in US interest rates are encouraging savers to invest their money in other currencies. 

The yuan is at its lowest in eight years against the dollar and the outflows are putting further pressure on the currency.

Authorities are trying to support it by buying yuan, drawing on China's foreign exchange reserves which fell by nearly $70 billion in November.

Source: AFP