To further advance administration streamlining and power delegation, and improve foreign exchange administration for the insurance business, the State Administration of Foreign Exchange (SAFE) recently released a Circular on Printing and Issuing Guidelines for Foreign Exchange Administration for Insurance Business (Huifa No. 6 [2015], hereinafter referred to as the “Circular”).

The Circular is highlighted as follows: First, streamlining administration and delegating power. The power to examine and approve the entry/exit of an insurance institution into/from foreign exchange insurance market as well as the conversion between domestic currency and foreign currency should be delegated. The ex-ante approval of entry/exit of insurance institutions at the provincial level and lower levels into/from foreign exchange insurance market should be cancelled. The requirement that the qualification of an insurance institution that provides insurance services in foreign exchange shall be reviewed every three years should be cancelled. Second, standardizing management. The business rules for activities including cross-border insurance, utilization and entrusted management of foreign exchange funds should be defined to standardize the use of foreign exchange accounts of an insurance institution. Third, integrating legislations. Eight regulations on foreign exchange administration related to insurance business should be abolished to facilitate the market players in understanding and implementation. Fourth, simplifying procedures. A processing financial institution may, based on the principles of “know your customer”, “understand your business” and “due diligence”, simplify the review documents for insurance business in foreign exchange. The centralized receipt and payment of foreign exchange under insurance business is allowed within the same insurance institution as a legal person. Fifth, improving supervision. Requirements for data submission should be made clear, and ex post monitoring and verification of foreign exchange under insurance business and related foreign exchange receipts and payments.

The Circular shall come into force on March 1, 2015.