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In order to further improve the foreign investment environments, to improve the regulatory efficiency of foreign exchange capital surrender under foreign investment and to facilitate the operation of investment capital of enterprises, the SAFE has decided to, on the basis of the experience of the pilot project carried out in some areas earlier, reform the administration of foreign exchange capital surrender under foreign investment through out the country. For the successful implementation of this reform, the relevant matters are hereby notified as follows: I. The reform of the administration methods of foreign exchange capital surrender under foreign investment shall refer to the change of the present administration methods, through which the foreign exchange capital surrender under foreign investment are examined and approved by the branches and management departments of the SAFE (hereinafter referred to the "foreign exchange administrations") one by one and the banks make the surrender on the basis of the documents of verification of the foreign exchange administrations, and to apply the new methods as this: the designated foreign exchange banks (hereinafter referred to the banks) are authorized to directly examine and make the foreign exchange capital surrender under foreign investment. That is, the foreign exchange administrations shall, according to the relevant conditions, delegate the authority of verifying foreign exchange capital surrender under foreign investment to the qualified banks, which shall take on the verification, statistical monitoring and record responsibilities within their authority. The foreign exchange administrations shall exercise indirect regulation of the foreign exchange capital surrender under foreign investment through the authorized banks. II. Foreign exchange capital under foreign investment shall refer to the fund in foreign exchange in the capital account of foreign-funded enterprises the maximum limits of which have been verified by the foreign exchange administrations. Surrender of the foreign exchange fund under capital account other than those in the capital account of foreign-funded enterprises shall still be subject to the verification of the foreign exchange administrations. III. Banks that fulfill the following conditions could submit application of authorization to the local foreign exchange administrations: (1) Having the qualification for operation of the business of surrender and sale of foreign exchange and having no record of major violations of the regulations concerning the surrenders and sales of foreign exchange under capital account in the recent 3 years; (2) Having sound control measures for the administration of the limitation of foreign exchange capital account under foreign investment; (3) Having a sound internal control system for the administration of foreign exchange capital surrender; and (4) Having sound capital surrender statistics, monitoring and early warning system, which could ensure timely report of the statistics and monitoring data of capital surrender and the abnormal situations detected during the operations to the local foreign exchange administrations. IV. Banks shall submit the following materials when applying to the local foreign exchange administration for authorization: (1) Written application (including the operations of foreign exchange business under capital account and the execution of laws and regulations in the recent 3 years); (2) License for Operation of Financial Business (copy); (3) The internal control system for the entering and surrender of foreign exchange capital under foreign investment. The internal control system shall include: a. Operational rules for the entering and surrender of foreign exchange capital; b. Measures for the control of the maximum limit of foreign exchange capital that may be entered into an account; c. System of transaction review and level examination of the entering and surrender of foreign exchange capital; d. System of statistical report of the entering and surrender of foreign exchange capital. (4) Information of the personnel to engage in the operation of that business; and (5) Other materials required by the foreign exchange administration. V. The application for authorization filed by a bank shall be subject to the examination and approval of the local foreign exchange administration or management department. The foreign exchange administrations and management departments shall examine whether the bank meets the conditions for authorization item by item, the one meeting the conditions shall be authorized to make the examination and approval for the surrender of foreign exchange capital under foreign investment, and the list of the authorized banks shall be promulgated in fixed terms. VI. The authorized banks shall, strictly in accordance with the relevant provisions on foreign exchange control and the operational rules for foreign exchange capital surrender, handle the entering of foreign exchange capital and examination of the surrender of foreign exchange capital used for normal expenditures of foreign-funded projects. The foreign exchange capital entered into an account must be in line with the scope of income of foreign exchange capital account approved by the foreign exchange administrations; the accumulated amount of foreign exchange capital entered into the account, namely the accumulated credits may not exceed the maximum limits of account approved by the foreign exchange administrations; the RMB capital resulted from the foreign exchange capital surrender may only be used for the normal expenditures for production and operation of foreign-funded projects. VII. Where the foreign exchange administrations have already run the Information System of Foreign Exchange Accounts Management, the authorized banks shall transfer the original trading data of the foreign exchange capital accounts, the entering and surrender of capital, to the local foreign exchange administrations on the next workday following the end of transaction; where the Information System of Foreign Exchange Accounts Management is not applied, the authorized banks shall submit the Statistics Report on Foreign Exchange Capital Surrender under Foreign Investment (refer to attachment 2) of the last month to the local foreign exchange administrations within the first 5 workdays of each month; where the amount of one surrender exceeds 1 million US dollars, or the accumulated amount of surrender of one enterprise in one day exceeds 1 million US dollars, the banks shall, by fax, submit the Report on Surrender of Foreign Exchange Capital in Large Amount under Foreign Investment (refer to attachment 3) to the local foreign exchange administrations on the next workday following the end of transaction; the authorized banks shall, when discovering abnormal situations in the operation of entering and surrender of foreign exchange, timely report to the local foreign exchange administrations. VIII. The branches and management departments shall strengthen the control over the authorized banks, urge them to submit the data, reports and other materials on time, make the statistical analysis of the foreign exchange capital surrender of the authorized banks in an earnest way, give selective examinations of the foreign exchange capital surrender of the authorized banks in unfixed terms, investigate into the abnormal situations and report to the administration at the higher levels timely, correct and deal with the rule-violations without delay. At the same time, they shall apply a system of spot inspection of the authorized banks, make 1 to 2 spot inspections of the authorized banks every half year, get full awareness of the foreign exchange capital surrender conducted by the authorized banks, and inspect the rule-compliance of the foreign exchange capital surrender conducted by the authorized banks and the implementation of the internal control system. The branches and management departments shall, within 15 workdays following each quarter, submit the report on the control of foreign exchange capital surrender under foreign investment and the quarterly reports on the foreign exchange capital surrender under foreign investment (refer to attachment 4). IX. Where an authorized bank fails to perform the responsibilities of examination, statistics and report of foreign exchange capital surrender according to the provisions or there are serious mistakes arising in the control of the limitation of foreign exchange capital accounts, the foreign exchange administration shall, apart from punishing the bank in accordance with the relevant provisions on foreign exchange control, suspend the authorization to it for 3 months. If the bank has corrected the mistakes within that 3 months, the foreign exchange administration may resume the authorization to it, in case of especially serious rule-violation or the failure of the bank to make rectification within the suspension period, the authorization to that bank may be revoked. X. In order to guarantee the implementation of the reform of the administration of foreign exchange capital surrender under foreign investment, the branches and management departments shall make efforts to do well in the following work: (1) In light of the actual situations of the localities, formulating their respective Detailed Rules for Implementation of the Examination of Foreign Exchange Capital Surrender under Foreign Investment Conducted by the Authorized Banks, and organizing the implementation after putting them on record at the State Administration of Foreign Exchange; (2) Organizing the publicity and training of the reform of the administration of foreign exchange capital surrender under foreign investment and the policies on foreign exchange control over investment; (3) When authorizing the banks, making full clearing of the foreign exchange capital accounts opened under foreign investment to check whether the banks have opened foreign exchange capital accounts without authorization, whether the amount entered into an account has exceeded the maximum limit approved by the foreign exchange administrations, and whether the banks have made foreign exchange capital surrender without authorization, etc. The problems found out shall be dealt with in accordance with the relevant laws and regulations; (4) Checking and confirming the basic business data submitted by the authorized banks. First, checking the account opening information such as the account numbers of the foreign exchange capital accounts, the maximum limits, etc., the check methods shall be comparing the account opening information submitted by the banks with such information in the documents of approval of the foreign exchange administrations and in the information system of foreign exchange control of foreign-funded enterprises. Second, checking the accumulated amount of income and expenditure of the accounts and the classification of them (namely the accumulated income: overseas inward remittance, domestic transfer-in; accumulated expenditure: outward remittance abroad, domestic transfer-out and surrender) from the day of account opening to the day on which the bank is to be authorized. The data shall be the original data of the foreign exchange capital accounts, which shall be the basis for the operation of other data of the foreign exchange capital accounts. XI. This Notice shall come into force as of July 1, 2002. Please make timely report to the Capital Account Section of the State Administration of Foreign Exchange if any problem is encountered in the implementation. Attachments: 1. Operational Rules for the Foreign Exchange Capital Surrender (omitted) 2. Statistics Report on Foreign Exchange Capital Surrender under Foreign Investment (omitted) 3. Report of Foreign Exchange Capital Surrender in Large Amount under the Foreign Investment (omitted) 4. Quarterly Report on Foreign Exchange Capital Surrender under Foreign Investment |
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