Treat the currency of a country (say JPY) as paper money or electronic money. Capital control attempts to monitor and regulate the outflow of every JPY.
Electronic flow is probably easier to regulate. I think all the electronic systems are operated by heavily regulated agencies.
Outflow can be conversion of JPY 1mil into EUR.
Outflow can also be fund transfer into a JPY account in Brazil, without currency conversion.
Case in point — FDI often brings in foreign currency, invest, profit (in local currency)… then they want to bring the profit out of the country — outflow. They need to convert or transfer.
To be effective, the system also needs capabilities to stop a particular outflow when necessary.
Q: how effective is capital control?
A: quite effective
Q: what are the capital outflow avenues for corporations (foreign or domestic)?
A: usually through banks. It’s easier and more effective to regulate banks than corporates.
Q: what are the capital outflow avenues for individuals?
A: for small amounts they can change with friends, but large amounts often go through regulated agencies.
Q: what are the capital outflow avenues for crime gangs?
A: murky underground tunnels.
Q: how many loopholes?