Since the beginning of 2018, the State Administration of Foreign Exchange (SAFE) has implemented the spirit of the 19th CPC National Congress and the arrangements of the CPC Central Committee and the State Council, with focus on serving the real economy, defending against financial risks and deepening financial reforms. The SAFE has tightened regulations of the foreign exchange market, maintaining a tough stance against violations of the laws and regulations on foreign exchange, stepping up punishments and cracking down on false transactions, frauds, illegal arbitrages and other behaviors involving the departure of financial capital from the real economy into the virtual economy, so as to safeguard the healthy and good market order. In accordance with the Regulation of the People's Republic of China on the Disclosure of Government Information (Decree No. 492 of the State Council), a selection of typical cases where foreign exchange regulations were violated are presented as follows:

Case 1: Entrepot trade handled by Hengfeng Bank Wenzhou Branch against regulations

In January 2016, without carrying out the required due diligence investigations into the authenticity of entrepot trade, Hengfeng Bank Wenzhou Branch handled the payments of foreign exchange for entrepot trade based on the false bills of lading presented.

The bank violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration. In accordance with Article 47 of the Regulations, it was fined RMB 1.464 million.

Case 2: Entrepot trade handled by Bank of Communications Xiamen Branch Guanyinshan Sub-branch against regulations

From February to July 2016, without carrying out the required due diligence investigations into the authenticity of entrepot trade, Bank of Communications Xiamen Branch Guanyinshan Sub-branch handled the sales of foreign exchange for entrepot trade based on the false bills of lading presented.

The bank violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration. In accordance with Article 47 of the Regulations, it was fined RMB 4 million and suspended from selling foreign exchange to companies for three months, with senior executives and other persons directly liable for the violation ordered to take responsibility.

Case 3: Entrepot trade handled by Bank of Tianjin Shanghai Branch against regulations

From March to April 2016, without carrying out the required due diligence investigations into the authenticity of entrepot trade, the Bank of Tianjin Shanghai Branch handled the payments of foreign exchange for entrepot trade based on the false bills of lading presented.

The bank violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration. In accordance with Article 47 of the Regulations, the bank was fined RMB 800,000.

Case 4: Onshore guarantees by HSBC Beijing Branch for offshore loans against regulations

From August 2014 to June 2017, HSBC Beijing Branch handled the payments of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out the required due diligence investigations into the purposes of the loans and relevant transaction backgrounds.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, a total of RMB 8.4222 million was fined and confiscated.

Case 5: Onshore guarantees by China Merchants Bank Xiamen Branch Jiahe Sub-branch for offshore loans against regulations

From July 2014 to July 2016, China Merchants Bank Xiamen Branch Jiahe Sub-branch handled the payments of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out the required due diligence investigations into the qualifications of the debtors, purposes of the loans, expected sources of repayments, and relevant transaction backgrounds.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, a total of RMB 4.3319 million was fined and confiscated.

Case 6: Onshore guarantees by China Minsheng Bank Xi'an Branch for offshore loans against regulations

From December 2014 to December 2016, China Minsheng Bank Xi'an Branch handled the payments of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out the required due diligence investigations into the qualifications of the debtors, purposes of the loans, expected sources of repayments, and relevant transaction backgrounds.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, a total of RMB 6.454 million was fined and confiscated, and its senior executives and other persons directly liable for the violation were ordered to take responsibility.

Case 7: Onshore guarantees by IBK (China) Tianjin Branch Xiqing Sub-branch for offshore loans against regulations

From June 2015 to June 2017, IBK (China) Tianjin Branch Xiqing Sub-branch handled the payments of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out the required due diligence investigations into the qualifications of the debtors, expected sources of repayments, and relevant transaction backgrounds.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, RMB 1.022 million was fined and confiscated.

Case 8: Split-up sales and payments of individual foreign exchange handled by China Construction Bank Lianjiang Sub-branch against regulations

From June 2016 to June 2017, China Construction Bank Lianjiang Sub-branch handled split-up sales and payments of individual foreign exchange against regulations.

The bank violated Article 7 of the Measures for the Administration of Individual Foreign Exchange. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, RMB 600,000 was fined.

Case 9: Foreign exchange evasion by Solvay Biochemicals (Taixing) Co., Ltd.

From November 2012 to December 2013, Solvay Biochemicals (Taixing) Co., Ltd. paid advance of EUR 2.2768 million and USD 50,500 based on the expired contracts, without importing anything.

The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations, the company was fined RMB 923,900.

Case 10: Foreign exchange evasion by Yantai Pingrui Trade Co., Ltd.

From August to September 2015, Yantai Pingrui Trade Co., Ltd. paid foreign exchange of USD 17.0682 million, based on the fabricated backgrounds of the entrepot trade, the bills of lading of a third party, false contracts and invoices.

The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations, the company was fined RMB 5.45 million.

Case 11: Foreign exchange evasion by Qingdao Zhonglin Yongsheng International Trade Co., Ltd.

From January to August 2016, Qingdao Zhonglin Yongsheng International Trade Co., Ltd. paid foreign exchange of USD 9.38 million, based on the fabricated backgrounds of the entrepot trade, and the bills of lading of third parties.

The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations, the company was fined RMB 3.10 million.

Case 12: Foreign exchange evasion by Shandong Hengjing Property Co., Ltd.

From November 2016 to April 2017, Shandong Hengjing Property Co., Ltd. transferred USD 1.8879 million overseas based on the annual quotas of 30 Chinese citizens for buying foreign exchange.

The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations, the company was fined RMB 644,200.

Case 13: Illegal foreign exchange settlement by Changshu Zhongguan Metallic Materials Co., Ltd.

From March 2015 to April 2016, Changshu Zhongguan Metallic Materials Co., Ltd. went through trade finance processes and settled foreign exchange of USD 4.18 million, with the false customs export declaration forms presented.

The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in illegal foreign exchange settlement. In accordance with Article 41 of the Regulations, the company was fined RMB 1.33 million.

Case 14: Illegal purchases and sales of foreign exchange by Mr. Guo, native of Henan

From April 2011 to September 2014, to transfer his assets overseas without abiding by the law, Mr. Guo transferred RMB 104.9292 million into a domestic account controlled by an underground bank, exchanged the money into foreign exchange and then transferred the foreign exchange via the underground bank into his overseas account.

Guo violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered breaking the laws on the purchases and sales of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Guo was fined RMB 8.35 million.

Case 15: Illegal purchases and sales of foreign exchange by Mr. Zhao, native of Zhejiang

From January 2014 to June 2016, to transfer his assets overseas without abiding by the law, Mr. Zhao transferred RMB 18.0060 million into a domestic account controlled by an underground bank, exchanged the money into foreign exchange and then transferred the foreign exchange via the underground bank into his overseas account.

Zhao violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered breaking the laws on the purchases and sales of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Zhao was fined RMB 1.62 million.

Case 16: Illegal purchases and sales of foreign exchange by Mr. Zhao, native of Guangdong

From October 2015 to September 2016, to transfer his assets overseas without abiding by the law, Mr. Zhao exchanged his money into foreign exchange and then transferred the foreign exchange via the underground bank into his overseas account. The money involved totaled USD 2.2114 million.

Zhao violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered breaking the laws on the purchases and sales of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Zhao was fined RMB 797,800.

Case 17: Purchases and sales of foreign exchange by Mr. Du, native of Sichuan, without approval

From July to September 2016, without respecting the bank card management regulations, Mr. Du swiped his RMB cards many times via the overseas POS machines to exchange his money into HK dollars in cash. The money involved was RMB 6.7911 million.

Du violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was involved in the purchases and sales of foreign exchange without approval. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Du was fined RMB 1.0187 million.

Case 18: Purchases and sales of foreign exchange by Mr. Wang, native of Fujian, without approval

In January 2017, to obtain illegal gains, Mr. Wang received RMB 11.2926 million through another person's account and sold HK dollars without approval.

Wang violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was involved in the purchases and sales of foreign exchange without approval. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Wang was fined RMB 1.07 million.

Case 19: Foreign exchange evasion by Mr. Wang, native of Sichuan, through split-up

From January to April 2016, to transfer his assets overseas without abiding by the law, Mr. Wang split up his personal assets and bought foreign exchange based on the annual quotas of 46 Chinese persons for purchasing foreign exchange and then transferred the foreign exchange into the overseas accounts. The funds thus transferred totaled HKD 17.8476 million.

Wang violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Wang was fined RMB 800,000.

Case 20: Foreign exchange evasion by Mr. Zhang, native of Jiangsu, through split-up

From January to December 2016, to transfer his assets overseas without abiding by the law, Mr. Zhang split up his personal assets and bought foreign exchange based on the annual quotas of 41 Chinese persons for buying foreign exchange and then transferred the foreign exchange into the overseas accounts. The funds thus transferred totaled USD 1.8459 million.

Zhang violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Wang was fined RMB 615,200.

Case 21: Foreign exchange evasion by Mr. Qiu, native of Jiangsu, through split-up

From September 2016 to January 2017, to transfer his assets overseas without abiding by the law, Mr. Qiu split up his personal assets and bought foreign exchange based on the annual quotas of 69 Chinese persons for buying foreign exchange and then transferred the foreign exchange into the overseas accounts. The funds thus transferred totaled USD 3.4949 million.

Qiu violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Wang was fined RMB 1.60 million.