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TABLE OF CONTENTS CHAPTER I GENERAL RULES CHAPTER II MARKET ACCESS AND WITHDRAWAL OF FOREIGN EXCHANGE SETTLEMENT AND SALE OPERATIONS CHAPTER III ADMINISTRATION OF FOREIGN EXCHANGE SETTLEMENT AND SALE TURNOVER POSITION CHAPTER IV ADMINISTRATION OF FOREIGN EXCHANGE SETTLEMENT AND SALE FOR SELF-PURPOSE CHAPTER V ADMINISTRATION OF FOREIGN EXCHANGE SETTLEMENT AND SALE FOR CLIENTS CHAPTER VI RULES FOR PUNISHMENT CHAPTER VII SUPPLEMENTARY RULES CHAPTER I GENERAL RULES Article 1. In order to regulate the foreign exchange settlement and sale operations by designated foreign exchange banks, to define the principles for the administration of foreign exchange settlement and sale operations for self-purposes of the banks, and to guarantee the smooth function of foreign exchange market, these Interim Measures are formulated in accordance with the Regulations of the People's Republic of China on Foreign Exchange Control (hereinafter referred to Regulations on Foreign Exchange Control), and other relevant provisions. Article 2. The People's Bank of China (hereinafter referred to the People's Bank) and the branches thereof, the State Administration of Foreign Exchange (hereinafter referred to SAFE) and the branches thereof are the bodies of supervision and administration of the foreign exchange settlement and sales operations by designated foreign exchange banks, among which, the market access and withdrawal of foreign exchange settlement and sale operations shall be subject to the examination and approval of the People's Bank jointly with the SAFE, the daily supervision and control of foreign exchange settlement and sale operations, the check and adjustment of turnover position in foreign exchange settlement and sale, and the non-on-spot inspection shall be subject to the SAFE, the on-spot inspection shall be carried out by the SAFE jointly with the People's Bank. The SAFE has the right to reject the applications for operating foreign exchange settlement and sale by financial institutions, to suspend or cancel the operation qualification for foreign exchange settlement and sale of the designated foreign exchange banks that violate the rules. Article 3. The following terms used in these Interim Measures are defined as follows: (1) Designated foreign exchange banks shall refer to the financial institutions approved by the People's Bank to operate foreign exchange settlement and sale, including Chinese-funded and foreign-funded financial institutions. Chinese-funded financial institutions shall refer to the policy-oriented banks, solely state-funded commercial banks, joint-stock commercial banks and the braches thereof, city and rural commercial banks and other approved financial institutions. Foreign-funded financial institutions shall refer to the foreign-funded banks, branch banks of foreign banks, equity joint banks and other approved financial institutions referred to in the Regulations of the People's Republic of China on the Administration of Foreign-funded Financial Institutions. (2) Operations of foreign settlement and sale for clients shall refer to the operations of exchange between RMB and convertible currencies by the designated foreign exchange banks for their clients. (3) Operations of foreign exchange settlement and sale for self-purpose shall refer to the operation of exchange between RMB and convertible currencies by designated foreign exchange banks for the needs of their own business activities. (4) Turnover position in foreign exchange settlement and sale shall refer to the fund, held by designated foreign exchange banks upon approval by the SAFE, that are specially used in turn over in foreign exchange settlement and sale operations, including the specific amount and the prescribed range of fluctuation. Article 4. To operate foreign exchange settlement and sale, a financial institution must get the approval of the People' s Bank and obtain the qualifications of a designated foreign exchange bank; non-designated foreign exchange banks may not operate foreign exchange settlement and sale. Article 5. In the settlement and sale of foreign exchange for the clients and for self-purpose, a designated foreign exchange bank shall abide by these Interim Measures and other relevant provisions on foreign exchange settlement and sale, and shall make separate management and statistics of the operations. Article 6. A designated foreign exchange bank shall abide by the provisions on the quota of foreign exchange settlement and sale turnover position, and shall sell the turnover position that exceeds the quota through the inter-bank market in a timely manner. Without approval of the SAFE, such position may not be offset with the needs of foreign exchange settlement and sale for self-purpose under the capital and financial account. Article 7. A designated foreign exchange bank shall set up separate account titles for foreign exchange settlement and sale, under the account titles of foreign exchange settlement and sale, foreign exchange settlement and sale for the clients, foreign exchange settlement and sale for self-purpose, sale of exceeding foreign exchange settlement and sale position within the system, and sale of exceeding foreign exchange settlement and sale position on the market shall be distinguished, and be counted separately. Article 8. A designated foreign exchange bank shall establish the system of preservation of foreign exchange settlement and sale documents, and shall preserve the relevant documents on the basis of foreign exchange settlement and sale for the clients and for self-purpose for a period of no less than 5 years. Article 9. A designated foreign exchange bank shall submit to the SAFE timely and accurate data of foreign exchange settlement and sale, turnover position etc, and other relevant statements and materials provided for by the SAFE. Article 10. A designated foreign exchange bank shall put on record large-amount transactions foreign exchange settlement and sale. Article 11. The SAFE shall examine the operational capacity of the personnel in charge of foreign exchange settlement and sale operations in designated foreign exchange banks (department manager or president in charge) through examinations and questionnaires. CHAPTER II MARKET ACCESS AND WITHDRAWAL OF FOREIGN EXCHANGE SETTLEMENT AND SALE OPERATIONS Article 12. A financial institution with the following conditions may apply for the operations of foreign exchange settlement and sale: (1) Having been established upon approval of the People's Bank and obtained the qualification for financial business; (2) Having sound internal management rules and systems, mainly including: 1. operational rules for foreign exchange settlement and sale; 2. foreign exchange settlement and sale statistics report system; 3. foreign exchange settlement and sale turnover position management system; 4. foreign exchange settlement and sale documents management system; and 5. separate account titles of foreign exchange settlement and sale, and accounting method; (3) Having relevant operational personnel that have been trained by the SAFE and passed the examination of the SAFE; (4) Having the management system of receiving and sending exchange rates of foreign exchange settlement and sale; (5) Having the necessary electronic and communication equipment needed for real time check of the electronic preservations of import and export customs declaration forms, for submitting the international balance statistics data and foreign exchange settlement and sale statistics data, and having a site fit for the operations; (6) If the branch of a financial institution applies for operating foreign exchange settlement and sale, it also needs to obtain the authorization of its head bank (office) or the bank at the higher level (department in charge); (7) Having sound foreign exchange operations, perfect internal control, and being able to make rectification and correction with regard to the previous rule-breaking acts of foreign exchange operations pursuant to the requirements of the People's Bank or SAFE; and (8) Other conditions provided for by the People's Bank or SAFE. Article 13. To apply for operating foreign exchange settlement and sale, a financial institution shall submit the following materials to the People's Bank, and shall send a copy to the SAFE at the same time: (1) Application report for operating foreign exchange settlement and sale; (2) Feasibility study report for operating foreign exchange settlement and sale; (3) Names, resumes and certificates of examination pass issued by the SAFE of the operational personnel of foreign exchange settlement and sale; (4) Brief introduction of the electronic and communication equipment and office site necessary for operating foreign exchange settlement and sale; (5) Rules and regulations on foreign exchange settlement and sale operations, and internal management system; and (6) Other materials required by the People's Bank or the SAFE. If the branch of a financial institution applies for operating foreign exchange settlement and sale, it shall also provide, apart from the aforesaid materials, the documents of approval granted by its head bank (office) or the bank at the next higher level (department in charge) for operating foreign exchange settlement and sale. Article 14. The examination and approval procedures for foreign exchange settlement and sale operations by a financial institution are as follows: (1) For policy-oriented banks, solely state-funded banks and joint-stock commercial banks, the foreign exchange settlement and sale operations shall be subject to the examination and approval of the People's Bank jointly with the SFAE; and (2) For the branches of policy-oriented banks, solely state-funded banks and joint-stock commercial banks, the city and rural commercial banks, and other Chinese-funded financial institutions and foreign-funded banks, the foreign exchange settlement and sale operations shall be subject to the examination and approval of the branches and business management departments of the People's Bank jointly with the local branches and departments of foreign exchange management of the SAFE. The branches and business management departments of the People's Bank may, according to the regulatory capacity of the central branches respectively subordinate to them, authorize the central branches to examine and approve the applications for foreign exchange settlement and sale operations filed by the bank braches, city commercial banks, rural commercial banks, other Chinese-funded financial institutions and foreign-funded banks within their respective jurisdictions, and shall countersign with the local branches of the SAFE. Article 15. With respect to the examination and approval of applications for foreign exchange settlement and sale operations by countersign by the People's Bank with the SAFE, the SAFE shall give opinions on approval within 15 workdays from the day of receiving the documents to be countersigned, and shall pass the opinions to the People's Bank. Article 16. A designated foreign exchange bank approved to operate foreign exchange settlement and sale shall, before formally starting the business, have the local foreign exchange administration to check the electronic and communication conditions provided for in Paragraph 5 of Article 12 of these Interim Measures. Article 17. To apply for stop of the foreign exchange settlement and sale operations, a designated foreign exchange bank shall submit the following materials to the People's Bank: (1) Application report for stop of foreign exchange settlement and sale operations (including the reasons for the stop, and the measures and steps for disposition of the creditor's rights and debts after the stop); (2) Documents of approval of the board of directors or the head bank (office), or the bank at the higher level (department in charge) for stop of foreign exchange settlement and sale operations; and (3) Other materials required by the People's Bank or SAFE. When the People' s Bank approves a designated foreign exchange bank to stop foreign exchange settlement and sale operations, it shall send a copy of the relevant documents of approval to the SAFE at the same time. CHAPTER III ADMINISTRATION OF FOREIGN EXCHANGE SETTLEMENT AND SALE TURNOVER POSITION Article 18. A designated foreign exchange bank shall, within 30 workdays from obtaining the operation business for foreign exchange settlement and sale, apply for ratification of the quota on foreign exchange settlement and sale turnover position. Article 19. The SAFE imposes quota control on foreign exchange settlement and sale turnover position of designated foreign exchange banks, and makes assessments on a daily basis. Article 20. The limits of authority for ratifying quota on foreign exchange settlement and sale turnover position are as follows: (1) Quota on foreign exchange settlement and sale turnover position of the head banks of solely state-funded commercial banks, joint-stock commercial banks and policy-oriented banks shall be subject to the ratification of the SAFE; (2) Quota on foreign exchange settlement and sale turnover position of the city commercial banks, rural commercial banks, other Chinese-funded financial institutions and foreign-funded banks shall be subject to the ratification of the local branches of the SAFE, and be submitted to the SAFE for record. Article 21. Quota on foreign exchange settlement and sale turnover position of designated foreign exchange banks shall be subject to the ratification of the SAFE in a unified way according to the principle of corporation regulation. The SAFE will not separately ratify turnover position for the branches of designated foreign exchange banks. Foreign exchange settlement and sale turnover position of the branches of designated foreign exchange banks shall be distributed and managed by their respective head banks (offices) within the scope ratified by the SAFE, and the distribution results shall be submitted to the local braches of the SAFE for record. The local braches of the SAFE shall be in charge of the daily administration of the foreign exchange settlement and sale turnover position of their respective localities. Article 22. The bases for ratification and adjustment of foreign exchange settlement and sale turnover position are: (1) Scale of the capital or working capital of a designated foreign exchange bank; (2) Number of branches; (3) Average daily balance of foreign exchange settlement and sale; (4) Highest daily foreign exchange sale amount; (5) Highest amount of a single foreign exchange settlement or sale transaction; (6) Quality of the foreign exchange settlement and sale turnover position data submitted each day; (7) Macro-economic factors of the state such as foreign exchange reserve, and rates of home and foreign currencies; and (8) Other. Article 23. Upon approval of the SAFE, a designated foreign exchange bank may purchase, with RMB working capital, foreign exchange as foreign exchange settlement and sale turnover position through the inter-bank foreign exchange market. If the designated foreign exchange bank purchases, with RMB working capital, foreign exchange as foreign exchange settlement and sale turnover position, it shall make the transaction through the inter-bank foreign exchange market within 30 workdays from the day of approval of the SAFE. If the transaction hasn't been made within the prescribed period, the documents of approval of the SAFE shall be invalidated automatically. Article 24. If a designated foreign exchange bank needs adjustment of the quota on foreign exchange settlement and sale turnover position due to relatively large changes to the business volume of foreign exchange settlement and sale, it shall file a written application with the SAFE. Without approval, the designated foreign exchange bank may not adjust the quota on turnover position by itself. Article 25. After the head bank (office) of a designated foreign exchange bank has obtained the qualification of designated foreign exchange bank, it shall apply for membership of the inter-bank foreign exchange market with China Foreign Exchange Trade System. If the branch of a designated foreign exchange bank applies for membership of the inter-bank foreign exchange market, it shall obtain the authorization of the bank at a higher level (department in charge). A designated foreign exchange bank branch that has obtained the membership of the inter-bank foreign exchange market may sell the exceeding foreign exchange settlement and sale turnover position through the inter-bank foreign exchange market, either may it sell the exceeding turnover position within its own system; a designated foreign exchange bank branch that hasn't obtained the membership of the inter-bank foreign exchange market may only sell the exceeding turnover position within its own system. Article 26. A designated foreign exchange bank shall manage the foreign exchange settlement and sale turnover position on a daily basis to keep the position within the quota ratified by the SAFE, and shall submit a position report to the SAFE every day. Selling of exceeding foreign exchange settlement and sale turnover position between designated foreign exchange banks may only be conducted through the inter-bank foreign exchange market. Article 27. The foreign exchange settlement and sale turnover position of each business day of a designated foreign exchange bank shall be converted into US dollars in calculation, the exchange gains or losses of turnover position shall be dealt with under other titles of foreign currency trade, and shall not be included in the turnover position. Article 28. A designated foreign exchange bank, for which the SAFE hasn't ratified the quota on foreign exchange settlement and sale turnover position, shall manage no position, the net balance of foreign exchange settlement and sale of a business day shall be offset through the inter-bank foreign exchange market on the next business day. Article 29. If a designated foreign exchange bank voluntarily applies for stop of foreign exchange settlement and sale operations or its operation qualification for foreign exchange settlement and sale has been cancelled by the People's Bank or the SAFE for violations of rules, it shall file an application with the SAFE within 30 days after the foreign exchange settlement and sale operations are stopped, and shall, upon approval by the SAFE, clear the foreign exchange settlement and sale turnover position to the day of stop of the operations. CHAPTER IV ADMINISTRATION OF FOREIGN EXCHANGE SETTLEMENT AND SALE FOR SELF-PURPOSE Article 30. Except there are otherwise provisions, the net foreign exchange income shall be sold out through the inter-bank foreign exchange market within 3 months from the end of a fiscal year or within 10 workdays after the board of directors approves the distribution scheme of the current year, and shall be put on record with the SAFE in advance. Where any foreign-funded bank fails to obtain the qualifications for managing the RMB business, it may refrain from settling foreign exchanges on its net foreign exchange gains. Article 31. The net RMB income of a foreign-funded bank approved to operate RMB business may be remitted by purchasing foreign exchange, and shall be put on record with the SAFE branch of the place where the bank is located. Article 32. Imports under the self-trade account of a designated foreign exchange bank shall be, according to the provisions of the state on import agency, commissioned to the foreign trade company with the power of foreign trade agency. The designated foreign exchange bank may not make any direct foreign payment. Article 33. Foreign payment under the self service trade account of a designated foreign exchange bank may be made directly through the bank's foreign exchange account, or by purchasing foreign exchange with RMB pursuant to the provisions. Article 34. Foreign exchange used under the capital and financial account of a designated foreign exchange bank upon approval of the SAFE shall come from the self-owned foreign exchange working capital. If the bank makes advance foreign exchange payment for the client as a result of operations of foreign exchange loan, international settlement or foreign exchange credit card, the bank shall offset the payment with its self-owned capital or working capital pursuant to the relevant provisions, and may not offset the payment by purchasing foreign exchange or using the settlement fund for the client. If the head bank (office) of a designated foreign exchange bank has insufficient foreign exchange capital or foreign exchange working capital, it may, upon approval of the SAFE, purchase foreign exchange to make up the capital through the inter-bank foreign exchange market. CHAPTER V ADMINISTRATION OF FOREIGN EXCHANGE SETTLEMENT AND SALE FOR CLIENTS Article 35. A designated foreign exchange bank shall, pursuant to the provisions of the state on foreign exchange settlement, sale and payment, operate the foreign exchange settlement, sale and payment for the clients, examine the prescribed valid vouchers and commercial bills, and sign on the relevant valid vouchers and commercial bills before keeping them for check pursuant to the provisions. Article 36. A designated foreign exchange bank shall promulgate the RMB exchange rate and handle the foreign exchange settlement and sale for the clients according to the RMB basic rate promulgated by the People's Bank each day and the prescribed range of fluctuation. Article 37. Other financial institutions that haven't obtained the qualification of designated foreign exchange bank shall handle their demand for foreign exchange settlement and sale through designated foreign exchange banks. Article 38. An authorized exchange undertaking exchange of individual foreign currencies and RMB shall obtain the authorization of a designated foreign exchange bank, the amount of foreign currency exchange occurring each day shall be included in the foreign exchange settlement and sale statistics by the authorizing bank, the amount exceeding the quota on turnover position shall be sold by the authorizing bank through the inter-bank foreign exchange market. CHAPTER VI RULES FOR PUNISHMENT Article 39. If a designated foreign exchange bank violates these Interim Measures or other relevant provisions on foreign exchange settlement, sale and payment, it shall be punished pursuant to the Regulations on Foreign Exchange Control and other relevant provisions. If a designated foreign exchange is in any of the following cases, the People's Bank shall cancel its operation qualification for foreign exchange settlement and sale: (1) Being taken over by the People's Bank due to statutory causes; (2) Being cancelled or declared bankruptcy pursuant to law; or (3) Being stopped from operating foreign exchange business by the People's Bank. Article 40. If a designated foreign exchange bank is in any of the following cases, the SAFE shall, apart from punishing it pursuant to the Regulations on Foreign Exchange Control, suspend or cancel its operation qualification for foreign exchange settlement and sale: (1) Handling foreign exchange settlement, sale or payment for the clients without prescribed valid vouchers and commercial bills, and the accumulated amount is more than US$1 million; (2) Handling foreign exchange settlement, sale or payment for the clients without complete prescribed valid vouchers and commercial bills, and the accumulated amount is more than US$5 million; (3) Selling foreign exchange for clients in amount exceeding the amount stated on the valid vouchers and commercial bills, and the accumulated amount sold is more than US$5 million; (4) In the operation of foreign exchange settlement and sale for self-purpose, handling the matters subject to examination and approval of the SAFE without such approval; (5) The amount transacted in rule-breaking foreign exchange settlement or sale accounts for more than 10% of the total amount transacted in foreign exchange settlement or sale of a year of the institution; (6) The rule-breaking foreign exchange settlement or sale transactions account for more than 10% of the total foreign exchange settlement or sale transactions of a year of the institution; or (7) Other acts seriously violating the provisions on foreign exchange settlement and sale. Article 41. If a designated foreign exchange bank violates the provisions on foreign exchange settlement and sale turnover position and is in any of the following cases, the SAFE shall, apart from punishing it according to the Regulations on Foreign Exchange Control, suspend or cancel its operation qualification for foreign exchange settlement and sale: (1) The designated foreign exchange bank exceeds the quota on foreign exchange settlement and sale turnover position ratified by the SAFE and the fluctuation range for 5 successive workdays or more, and fails to sell the exceeding position through the inter-bank foreign exchange market; (2) There are 10 times or more in one quarter that the designated foreign exchange bank exceeds the quota on foreign exchange settlement and sale turnover position ratified by the SAFE and the fluctuation range, and fails to sell the exceeding position through the inter-bank foreign exchange market; (3) The designated foreign exchange bank has made 4 or more statistics mistakes of foreign exchange settlement and sale turnover position in 3 successive months; or (4) Other acts seriously violating the provisions on foreign exchange settlement and sale turnover position. Article 42. If a designated foreign exchange bank, in violation of the report system of foreign exchange settlement and sale, fails to submit the statements and materials pursuant to the provisions, as well as fails to put on record the abnormal situations pursuant to the provisions, the SAFE shall punish it pursuant to the Regulations on Foreign Exchange Control and other relevant provisions. If the bank has failed to submit the statements and materials for many times in a year or failed to put on record the large-amount foreign exchange settlement and sale transactions, the SAFE shall suspend or cancel its operation qualification for foreign exchange settlement and sale. Article 43. If a designated foreign exchange bank or authorized exchange violates these Interim Measures or other provisions on foreign exchange settlement, sale and payment, the directly liable personnel and the directly responsible personnel in-charge shall be dealt with by the relevant departments pursuant to the Provisions on the Administrative Sanctions for the Financial Institutions and the Liable Personnel that Violate the Provisions on Sale of or Payment in Foreign Exchange, and the Interim Provisions on the Administrative Sanctions or Disciplinary Sanctions for the Acts Violating Provisions on Foreign Exchange Control Such as Fraudulently Purchasing Foreign Exchange, Illegal Exchange Arbitration, Exchange Evasion, and Illegal Trade of Foreign Exchange. CHAPTER VII SUPPLEMENTARY RULES Article 44. With respect to future foreign exchange settlement and sale, and other derivative transactions involving exchange of RMB and foreign currencies, the administration measures shall be formulated by the People's Bank separately. Article 45. The power to interpret these Interim Measures shall remain with the People's Bank. |
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