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To ensure the economic and financial security of the state, crack down strongly on the cross-border flow of hot money, and maintain order in the foreign exchange market, on November 1, 2010 the State Administration of Foreign Exchange (hereinafter referred to as the SAFE) announced a first batch of cases involving some enterprises and individuals that carried out illegal foreign exchange transactions and were subjected to penalty. Now a second batch of such cases, based on the progress in the relevant inspections, is announced as follows: From early 2009 to March 2010, Xinya Electronic Technology Co., Ltd. in Dongguan city, Guangdong province, collected 65 advance payments worth USD4.8313 million but the verification and writing-off formalities were six months overdue, which violated the relevant provisions on the administration of the verification and writing-off of export proceeds in foreign exchange. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations on the Administration of the Foreign Exchange System of the Peoples Republic of China (hereinafter referred to as the Regulations). In September 2009, Dading Handbags Co., Ltd. in Zengcheng city, Guangdong province, was found holding 2 payments totaling USD1.05 million in foreign exchange for the processing of imported materials, but the verification and writing-off formalities were six months overdue, which violated the relevant provisions on administration of the verification and writing-off of export proceeds in foreign exchange. In addition, the said company overcharged in foreign currency for the processing of imported materials and used some amounts of Renminbi settled thereof for stocks and securities investments. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. In May 2009, Feihua Textiles Co., Ltd. in Haimen city, Jiangsu province, due to a fake purchase and sales contract signed with Meidan Construction Materials Trading Co., Ltd. in Haimen city, had USD3.0679 million-worth of foreign exchange from foreign investors settled through 11 transactions, and Meidan Construction Materials Trading Co., Ltd. in Haimen city transferred the settled capital in the amount of RMB20.9103 million via online banking to the account of a personal debit card. This case was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. From February to May 2008, Wanrong (Liaocheng) Gardening Engineering Co., Ltd. in Shandong province handled the settlement of USD63.32 million-worth of foreign exchange from foreign investors in payment for a construction project. Of the Renminbi resulting therefrom, the said company transferred RMB147.89 million to the account of its wholly-owned property subsidiary through different channels, used RMB15 million to purchase real estate outside of Shandong province, and lent RMB279.5 million to other domestic enterprises. Such behavior was deemed to be in violation of the relevant regulations on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. From September to December, 2009, Qian An VV Lan Shan Building Materials Company in Tangshan city, Hebei province, settled EUR614,400-worth of foreign investment capital based on invalid documents, and then transferred the RMB6 million resulting therefrom to the Renminbi account of Qian An Lanshan Cement Co., Ltd., a shareholder in the Chinese party thereof. Such behavior was deemed to be in violation of the relevant provisions on administration of the settlement of foreign exchange capital, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. From November to December 2008, a person surnamed Huang, a local citizen of Jinhua city, Zhejiang province, based on 18 cargo declarations for export, for which the verification and writing-off of the export proceeds in foreign exchange had been completed, handled a settlement of USD1.7485 million through a personal foreign exchange account thereof. Such behavior was deemed to be in violation of the Regulations. According to the Regulations, the SAFE rendered a decision to impose a fine on Huang as an administrative penalty. In December 2006, after having had USD7.5 million worth of capital settled through two transactions, Guangdong Credit Orienwise Guarantee Ltd. used RMB58.6365 million resulting therefrom to purchase funds. Such behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. In June, 2010, Tianming (Shenyang) Alcohol Co., Ltd. in Liaoning province owed overseas institution(s) SGD37.6 million resulting from the performance of an external guarantee under the item of a domestic loan, but failed to register the foreign debt with the foreign exchange authorities within the prescribed time limit. Such behavior was deemed to be violation of the relevant provisions on the administration of foreign debts, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. From February to June 2007, Yestock Technology (Shenzhen) Co., Ltd., based on a fake purchase and sales contract for GPS terminals signed with Shenzhen Chuangtou Electronic Information Technology Co., Ltd., settled HKD10.6495 million through three transactions and injected RMB9.9 million resulting therefrom into the stock market. The companys behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. On August 13, 2007, Qingmao Paper Industry Co., Ltd. in Shaxian county, Fujian province, settled HKD14.075 million based on a purchase and sales contract for machinery and equipment signed with Fujian Changfa Trading Co., Ltd. Thereafter, the said company required Fujian Changfa Trading Co., Ltd. to remit RMB13.6 million resulting therefrom to Fuzhou Huicheng Real Estate Co., Ltd. under the pretext that it was unable to start up the project immediately. The said companys behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. When conducting economic activities, all market entities shall foster an awareness of their social responsibilities and develop their business in a sound and scientific manner in strict compliance with all policies concerning the administration of foreign exchange. The penalized enterprises and individuals shall regard this as a warning and shall firmly establish an awareness of law-abiding operations. All other enterprises and individuals shall also draw lessons from the above-mentioned cases to strengthen their self-discipline, and to operate their businesses in strict accordance with the law. The SAFE shall step up efforts to facilitate the process of trade and investment and to enhance a service-oriented awareness so as to meet the legitimate demands of enterprises and individuals for foreign exchange; meanwhile, it shall strengthen supervision and inspection of the compliance of the foreign exchange business conducted by market entities and continue to crack down on hot moneywith intensified efforts, thereby effectively maintaining the safety of China's foreign-related economy and finance. December 10, 2010 2010-12-10/en/2010/1210/970.html
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To maintain national economic and financial security and to crack down strongly on cross-border flows of hot money, since February 2010, the SAFE has launched special campaign to combat hot money. Careful inspections have been carried out of foreign exchange receipts and payments in foreign trade and settlement of foreign exchange by enterprises as well as foreign exchange settlement and sales by individuals. The inspections show that most enterprises and individuals have handled businesses such as foreign exchange receipts and payments and settlement and sales of foreign exchange in strict compliance with the relevant regulations for the administration of foreign exchange. However, some enterprises and individuals still carried out fake transactions or adopted deceptive means in violation of the regulations. They collected advances on sales based on fake transactions, conducted false settlements of foreign exchange for foreign investments, and some individuals carried out settlement and sales of foreign exchange by splitting large sums of money into smaller parts. Such violations have resulted in the inflow of hot money.Cases of the relevant violations and penalties on enterprises and individuals are hereby announced as follows: In 2009, China Best Food Limited in Qingdao of Shandong province failed to declare its trading activities by classifying relevant activities into categories, such as processing with imported materials, transit trade, and general trade, when handling foreign exchange collections and payments for trade, resulting in 13 deals with incorrect declaration data involving a total of USD13.86 million. Such behavior was in violation of the relevant regulations on statistics and declaration of the balance of payments. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. During the period from January to September, 2008, Adani Industrial Co., Ltd. in Yingkou city of Liaoning province collected advances on sales totaling USD11.06 million. To date, the company has not carried out the verification and writing-off of the collection of foreign exchange from exports. An inspection revealed that the inflow of capital was based on fake transactions, which violated the relevant regulations on administration of the verification and writing-off of foreign exchange collections from exports. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. In December 2009, Wuzhou Property Development Limited in Huaian city of Jiangsu province handled settlement of foreign exchange in the amount of HKD155 million for foreign investment, with the declared purpose of payment for land use. However, an inspection revealed that RMB80 million of the funds was used to grant loans within the territory of China, which violated the relevant regulations on the administration of foreign exchange settlement for capital funds. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. During the period from February 2007 to December 2009, a company located outside the territory of China remitted 164 deals of funds into the personal saving accounts of 95 staff members of Unitera Garment Co., Ltd. in Yingkou city of Liaoning province, amounting to a total of USD5.89 million. The staff members settled the relevant exchange and then returned the funds in RMB to the company. The splitting of large sums of funds into small parts for foreign exchange settlement and sales by this company violated the relevant regulations on the administration of foreign exchange for individuals. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. During the period from January 2009 to April 2010, Ma, an individual within the territory of China, collected USD8.29 million from outside China in the name of his relatives and staff members of the company where he worked (146 people in total) and settled the exchange. Mas splitting the large sums of funds into small parts for settlement and sales violated the relevant regulations on the administration of foreign exchange for individuals. According to the Regulations, the SAFE rendered a decision to impose a fine on Ma as an administrative penalty. In April and June 2009, Yuantian Investment Management Consulting Co., Ltd. in Dalian city of Liaoning province settled foreign exchange of RMB102 million for foreign investment by using a false contract, which violated the relevant regulations on the administration of foreign exchange settlement for capital funds. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. In July 2009, Hanshi Infrastructure Construction Co., Ltd. in Nantong city of Jiangsu province settled exchange for foreign investment for payment for construction. The settled funds of RMB27.8 million were transferred to the personal accounts of persons surnamed Ye, Chen, and others in Putian city of Fujian province. Such behavior violated the relevant regulations on the administration of foreign exchange settlement for capital funds. An inspection revealed that the above funds were actually remitted from an underground money shop outside of China. The company hoped to obtain qualifications as a foreign-invested entity based on the fake capital fund and then to return the settled funds to the underground money shop. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. In November 2009, Xiehe Wind Power Equipment Manufacture & Technical Service Co., Ltd. in Fuxin city of Liaoning province used RMB3.1 million acquired from the settlement of foreign investment capital for a subscription of new shares instead of normal production and operations. Such behavior violated the relevant regulations on the administration of foreign exchange settlement for capital funds. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. During the period from December 2009 to March 2010, Zhanfeng Trading Company in Changzhou city of Jiangsu province handled the settlement of foreign investment capital in the amount of USD9.85 million for payment for demolition compensation and for funds for land transfers. However, the company did not obtain the corresponding land-use rights. The settled funds in the amount of RMB57.18 million were transferred to the account of Yingkai Steel Trading Co., Ltd. in Suzhou of Jiangsu province. Such behavior violated the relevant regulations on the administration of foreign exchange settlement for capital funds. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. All market entities shall conscientiously establish an awareness of their social responsibility and operate in a prudent and scientific manner in strict compliance with the policies on foreign exchange administration. The penalized enterprises and individuals shall regard this as a warning and firmly establish an awareness of law-abiding operations. All other enterprises and individuals shall also draw lessons from the above-mentioned cases to strengthen their self-discipline and to operate their business in strict accordance with the law. The SAFE shall vigorously facilitate trade and investment and enhance a service-oriented awareness so as to meet the reasonable foreign exchange demands of enterprises and individuals. Furthermore, there will be strengthened efforts to supervise and inspect the foreign exchange business of market entities with respect to regulatory compliance and to crack down on the flow of hot money,thus safeguarding the foreign-related economic and financial security of the state. November 1, 2010 2010-11-01/en/2010/1101/963.html
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To ensure the economic and financial security of the state, safeguard normal order in the foreign exchange market, and block the major channels for cross-border flows of hot money,the State Administration of Foreign Exchange (SAFE) is collaborating closely with the public security organs to intensify efforts to crack down on illegal foreign exchange transactions, including underground money shops and online foreign exchange speculation. A number of cases involving underground money shops and online foreign exchange speculation have been discovered. The cases that have been investigated and resolved as follows: On June 16, 2009, the Shenzhen Branch of the State Administration of Foreign Exchange collaborated with the public security organs in ferreting out an underground money shop operated by the Wu brothers under the fraudulent name of the Wuji Dongcheng Shop.A total amount of RMB1.1 million in cash was seized on site, and 370 bank accounts in an amount of over RMB30 million were frozen. On August 3, 2010, the Wu brothers were sentenced to fixed prison terms and fined by the local Peoples Court for the crime of illegal operations. AFG Investment Management (Shanghai) Co., Ltd., established by Lü, carried out financial business such as foreign exchange transactions, the taking of deposits, loan extensions, and credit card agency without approval from the relevant authorities, involving a combined transaction value of RMB11.1 billion. On May 12, 2010, the local Peoples Court imposed fines on the company for the crime of illegal operations, and Lü was sentenced to a fix prison term and fined for the crime of illegal operations and illegal cross-border transactions. Lüs illegal income of more than RMB50 million was confiscated. On March 18, 2009, a case of illegal foreign exchange transactions was ferreted out in Zhuhai city, involving the criminals Chen and Lin and their associates. The amount of HKD1.3 million and RMB30,000 in illegal transactions was seized, and a total of RMB2.29 million of illegal foreign exchange transactions in bank accounts was frozen. On June 8, 2010, Chen was sentenced to a fixed prison term and fined by the local Peoples Court for the crime of illegal operations. The cash seized on site and the funds deposited in the frozen accounts were confiscated and turned over to the national treasury. During the period from January to May 2009, Wu carried out illegal foreign exchange transactions in a teahouse located in Dongcheng District of Dongguan city, and collected service charges from his customers. On May 21, 2009, the den was discovered out and destroyed. The police captured 19 passbooks, 36 bankcards, laptops, and other tools for illegal foreign exchange transactions. In July 2010, Wu was condemned to a fixed prison term and fined by the local Peoples Court for the crime of illegal operations. On April 23, 2010, the Foreign Exchange Administration in Jiangmen city, in collaboration with the public security organs, cracked down on an underground money shop operated by Huang from Enping city. A total of USD110,000 was seized on site. In September 2010, the Foreign Exchange Administration in Jiangmen city imposed administrative penalties on Huang and Zhou in the form of fines in accordance with the Regulations of the Peoples Republic of China on Foreign Exchange Administration. In March 2009, Liu and his associate investors collaborated in registering and establishing UBS International Holdings Co., Ltd. in Hong Kong through Hong Kong United Accounting & Secretarial Limited. They rented a place on West Zhongshan Road in Shanghai and engaged in illegal gold business including foreign exchange and gold transactions. On January 15, 2010, Liu and the other two associated were sentenced to fixed prison terms and fined by the local Peoples Court for the crime of illegal operations. In June 2007, Li cooperated with his associate sin establishing the Shanghai Mobijet Enterprise Investment Management Co., Ltd. and engaged in illegal gold business including foreign exchange and gold transactions. On May 31, 2010, the local Peoples Court imposed fines on Shanghai Mobijet Enterprise Investment Management Co., Ltd. for the crime of illegal operations, and Li and the other two associates were sentenced to fixed prison terms and fined for the crime of illegal operations. Kunming Xinghui Economic Information Consulting Co., Ltd. illegally introduced clients to become involved in the online foreign exchange margin trading operated by the overseas GFX Capital Markets Ltd. In 2008, the Foreign Exchange Administration of Yunnan province, collaborating with the public security organs, captured 41 pieces of computer equipment used for criminal purposes and relevant evidence, and arrested 28 suspects. On February 9, 2010, Xu and nine other major suspects were sentenced to fixed prison terms and fined by the local Peoples Court for the crime of illegal operations. The equipment and illegal gains involved in the crime were confiscated as required by law. During the period from December 2007 to October 2008, Xiamen Baochangxing Investment Consulting Co., Ltd. and its branch in Zhangzhou city engaged in illegal foreign exchange margin trading without a license to engage in related financial business. The case involved a total sum of USD2.44 million from illegal operations and USD390,000 from illegal income. On May 10, 2010, Li and his associates were sentenced to fixed prison terms and fined by the local Peoples Court for the crime of illegal operations. Between May 2007 and 2009, He and Cui used Baijiaxin Investment Consulting Management Co., Ltd. as the agent for Shanghai Baifujin Company in Taizhou city of Zhejiang province and accepted 20 clients and an amount of over RMB5 million to carry out online foreign exchange speculation. By paying and collecting funds in RMB within the territory of China while collecting and paying corresponding foreign exchange funds outside the territory of China, the two received illegal service charges of more than USD40,000. On September 13, 2010, He was sentenced to a fixed prison term and fined for the crime of illegal operations and Cui was detained and fined by the local Peoples Court. All market entities shall firmly establish a sense of legal governance, and earnestly comply with the regulations on foreign exchange administration. Carrying out business at illegal places and through illegal channels for transactions such as underground money shops and online foreign exchange speculation is strictly prohibited. The foreign exchange administration departments shall continue to strengthen cooperation with the public security organs and play an active role in cracking down on underground money shops, online foreign exchange speculation, and other kinds of illegal foreign exchange activities. In addition, intensified efforts shall be made to combat foreign exchange-related criminal activities and stiff penalties shall be imposed on cross-border flows of hot money so as to conscientiously safeguard the foreign-related economic and financial security of the state. November 5, 2010 2010-11-05/en/2010/1105/964.html
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Editor's Note: With the deepening of Chinas reform and opening, foreign exchange is becoming more closely related to the interests of the public. The State Administration of Foreign Exchange (SAFE) proposed that continual efforts should be made to disseminate knowledge about foreign exchange administration and to interpret relevant policies so the public will better understand Chinas foreign exchange administration. In July 2010, the SAFE compiled Q&As about hot issues regarding investment in the U.S.-based Fannie Mae and Freddie Mac that received wide and enthusiastic support from the public. On February 11, 2011, the Treasury Department and the U.S. Housing and Urban Development Department issued a white paper on the reform of Fannie Mae and Freddie Mac, which aroused widespread concern that Chinas foreign exchange reserve investments in the two GSEs may be affected. We responded to this concern and have found that so far no losses have been incurred in Chinas bond investments in the above two companies. To allow readers to better understand the latest developments, we once again have compiled Q&As about related issues for your reference. Q1: Why did the United States issue the white paper on the reform of Fannie Mae and Freddie Mac at this time? A: Since the outbreak of the financial crisis there have been appeals and disputes over the reform of Fannie Mae and Freddie Mac. The Congressional Dodd-Frank Reform Bill, enacted in July 2010, mandated that the government submit a proposal on the reform of Fannie Mae and Freddie Mac. In 2010 the U.S. Treasury Department held a seminar on the reform of housing financing, proposing that the government submit a preliminary reform plan to the Congress in early 2011. The issuance of the white paper is in accordance with this plan. Q2. Are there any new ideas proposed in the white paper about the orientation of the reform? A: We noticed in the white paper that the reform of the U.S. housing financial market is primarily targeted at changing the role of the government in regulating the market. The white paper proposes that the government confine its responsibilities to such areas as strengthening its regulatory efforts, protecting the interests of consumers, giving special support to middle- and low-income homeowners and tenants, maintaining market stability, and combating the financial crisis. The U.S. government will gradually exit from the housing financial market and will endeavor to create conditions for private capital to play a dominant role. In particular, we noted that there are no changes with regard to the U.S. government commitment to support the two GSEs, which means that the government will guarantee that the two GSEs will have sufficient capital to exit from the market. The reform plan primarily proposes that the government will bring into play the functions of the private sector to bolster the housing financial market, maintain the equity and effectiveness of the housing market, and build up a well-organized system for supporting housing loans and promoting the reform in a responsible and prudent manner. The reform relates directly to whittling away the functions of the two GSEs in the housing financial market and proposes three alternatives to the current model of housing financing for the two GSEs. It will take quite a long time from the issuance of the white paper to implementation, which will entail a series of procedures set forth by the U.S Congress and the U.S. government. It is for this reason that thus far no detailed timetable for the reform has been worked out by the government. Analysis indicates that implementation may begin after 2012 provided that everything proceeds smoothly. Q3: What was the response of the financial market after issuance of the white paper? A: As of February 11, the financial market actively responded to the issuance of the white paper. By the time of closing in New York, there was a widespread increase in the price of bonds issued by the two GSEs. The increase surpassed that of Treasuries, with the highest reaching up to 0.5%. Q4: There are some concerns that after issuance of the white paper Chinas bond investments in the two GSEs with its foreign exchange reserves will suffer losses. What do you think about the security of these investments? A: As government-sponsored enterprises incorporated by congressional legislation, Fannie Mae and Freddie Mac have always been the principal instruments of U.S. housing financial policies. Even after being taken over by the U.S. government due to the financial crisis, the two companies have remained the primary channels of Americas housing financing, through which the overwhelming bulk of newly-supplemented mortgage loans are provided. In addition to its position as a colossal investor injecting hundreds of billions of dollars into the two GSEs, the U.S. government is also the largest holder of bonds issued by the two companies, with total bond investment topping USD1.6 trillion. In view of the crucial role of Fannie Mae and Freddie Mac in bolstering the American housing market, accelerating the economic restoration, and maintaining financial stability, the white paper underscores that prudential measures will be taken in the reform to ensure the capital sufficiency of the two GSEs to completely fulfill their guaranty obligations and debt repayments. The government will not pursue any policies or measures that may impair the capability of the two companies to carry out their obligations. In determining a timetable for the reform, the U.S. government will take into account many factors, such as the process of economic restoration and the conditions in the financial market. As for China, our country has always complied with the principle of security, liquidity, value maintenance, and appreciationin handling its foreign exchange reserves. Prudent efforts have been made to implement multiple investment strategies as a way to guard against potential risks. As a result, the main potential risks to the bond investments in the two GSEs have been effectively defused. 2011-02-12/en/2011/0212/984.html
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Recently, a meeting was held in Beijing by the State Administration of Foreign Exchange (SAFE) to circulate information about the situation regarding inspections of the foreign exchange businesses operated by banks. Deng Xianhong, deputy administrator of the SAFE, attended the meeting and delivered a speech. Representatives from 21 Chinese-funded banks and 7 foreign-funded banks attended the meeting. It was stressed at the meeting that due to the drastic changes in the domestic and international economic and financial environments, the SAFE has taken active steps to prevent risks from abnormal cross-border fund flows and to crack down strongly on various types of violations of the foreign exchange laws and regulations. During the past two years, the SAFE carried out in succession a series of special inspections throughout the country of the foreign exchange businesses operated by banks. The results show that the designated foreign exchange banks have enhanced their awareness of regulatory compliance and risk prevention and have made improvements to comply with the regulations. But it was also discovered that some banks are still operating in breach of the foreign exchange regulations. The meeting circulated information about the banks violations of the regulations with respect to the operation of foreign exchange businesses. Typical examples of violations include: failure to fulfill the obligation to examine authenticity when handling agent businesses, violating the regulations for the administration of foreign exchange accounts, declaration of the balance of payments, capital fund and settlement and sales of exchange by individuals; violations of the regulations with regard to external debt, the comprehensive position of exchange settlement and sales, capital conversions of home and foreign currencies, and so forth, when handling foreign exchange businesses. Meanwhile, there are some specific phenomena in bank operations that require attention. These are: the constant low-level of operations of the comprehensive position by some banks, the hyper-normal increase in foreign exchange loans by some banks, and the increase in the number of interest arbitrage trade financing products by some banks. These violations can be attributed to three factors: the first is that some banks are weak in their awareness of regulatory compliance and driven by profit-making motives, some banks have deliberately lowered standards to examine authenticity; the second is that the internal control mechanisms of some banks are still imperfect, and their capability to execute their management system is weak; the third is that since the outbreak of the global financial crisis, some banks, driven by profit-making motives, have increasingly focused on business expansion and have overlooked regulatory compliance in their business operations. Some representatives of the banks spoke at the meeting. They introduced their operations of foreign exchange business and some specific measures for enhancing the construction of internal control systems, optimizing foreign exchange business procedures, upgrading relevant techniques, and so on. They also made some suggestions about further refining foreign exchange administration policies, promoting policy dissemination and training, strengthening communications between the SAFE and banks, as well as other foreign-related economic entities. The meeting established the requirement that all banks shall conscientiously follow the concept of operating prudently and developing in a scientific manner. Banks are required to actively undertake their social responsibilities and to operate in strict compliance with the policies on foreign exchange administration. Looking into the future, on the one hand the SAFE will continue to uphold a people-oriented philosophy, strive to improve the quality of services, achieve the Five Transformations, and take practical measures to facilitate the operations of banks, enterprises, and individuals. On the other hand, efforts will be made to constantly refine foreign exchange administration policies, to enhance statistics, monitoring, and analysis, to strengthen foreign exchange inspections, to adopt a combination of inspections both on a regular and irregular basis, to constantly expand the scope of inspections, to increase the frequency of inspections, to further intensify efforts to punish violations of the foreign exchange laws and regulations, to effectively check illegal foreign exchange transactions, such as the inflow of hot money, and to promote the healthy and stable development of the foreign-related economy and finance. 2010-07-29/en/2010/0729/942.html
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We are looking for individuals with extraordinary intellectual capability and curiosity, ability to rapidly learn and apply new concepts, as well as self-motivation and responsibility to join us. We seek diversified educational backgrounds and encourage applicants from all academic disciplines. About Us In fulfilling the responsibilities of foreign reserve management, we put the interests of the nation and the people at the very first. Aiming at long-term preservation and value adding for our reserve assets, we embrace prudential, professional and active investment management, with strategic and tactical asset allocation and diversification over a long-term investment horizon. With headquarter in Beijing and offices in overseas financial centers, we carry out around-the-clock asset management, under an efficient and coherent decision-making / risk control framework. With a young, qualified and motivated team from diversified backgrounds, we value a SAFE culture of ethics and integrity, a constant pursuit of knowledge and truth, and a team spirit of interaction and liveliness. As we value people as the most important asset, we offer competitive incentives and training packages for our team. Vacancies We have the following job vacancies, based in Beijing headquarters and overseas offices: general affairs, asset allocation, investment management, external managers, risk management, compliance and internal audit, legal affairs, operations, information technology and human resources. Please refer to the attached vacancy list for details. General Requirements ·Bachelor degree or above from world renowned universities. ·Relevant working experience specific to the vacancy. ·Good command of both Chinese and English as working language. ·Computer proficiency. ·Other criteria specific to the vacancy. Application Procedures ·Please visit http://safe.chinahr.com to submit your CV and cover letter. To facilitate the screening, we ONLY accept the application through our website. ·Application deadline: ·Short-listed applicants will be invited to interview after documentation screening. ·New recruits will be required to sign employment contracts with probation in accordance with Chinese and local regulations. Contacts Tel: 86-10-66218899-1133/3073(ext.) (8:00-17:00 Beijing Time) Fax: 86-10-66213319 Email: HR@mail.rmd-safe.gov.cn (recommended) Apply FILE: Job Openings of Recruitment Program 2011 2010-10-25/en/2010/1025/960.html
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Recently there has been media coverage indicating that China may suffer huge losses from its investments in bonds issued by the U.S.-based Fannie Mae and Freddie Mac, and the losses may amount to 450 billion U.S. dollars. An interview was conducted on relevant issues by officials of the SAFE. Q: There has been media coverage that China may suffer great losses from its investments in bonds issued by the U.S.-based Fannie Mae and Freddie Mac, and the amount may reach up to USD450 billion. Is this true? If so, what is the actual amount? A: The white paper concerning the reform of Fannie Mae and Freddie Mac soon to be issued by the U.S. Treasury Department has aroused widespread concern that China may suffer losses in its foreign exchange reserves. There has been media coverage indicating that the lossesmay amount to 450 billion U.S. dollars. These reports are utterly groundless. Up to now there have been smooth capital repayments with interest from Chinas bond investments in Fannie Mae and Freddie Mac by capitalizing on the foreign exchange reserves. No losses have been incurred. Based on the relevant indices that are widely used by the market, during the three years from 2008 to 2010, Chinas annual average rate of return on its bond investments in Fannie Mae and Freddie Mac hovered around 6%. The country has never allocated its foreign exchange reserves for stock investment in Fannie Mae and Freddie Mac. So the decline in the stock price and the delisting of the stocks of the two companies have no effect on Chinas foreign exchange reserves. We conscientiously manage our reserve assets and invest responsibly in the international market. Security is our top priority for any investment with our foreign exchange reserves. We have taken effective measures to guard against any possible risks, and potential risks have been defused risks defused effectively. The SAFE will continue to operate the foreign exchange reserves in compliance with the established principles and will take active steps to implement prudent investment strategies so as to ensure the security of our reserve assets and to achieve reasonable returns on our investments. 2011-02-11/en/2011/0211/983.html
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A meeting was recently held by the SAFE to review the investment quotas for qualified institutional investors. Total quotas of USD400 million were allocated to four qualified foreign institutional investors (QFIIs), including Aviva Investors Global Services Ltd., Bank Julius Baer & Co. Ltd., Schroder Investment Management Ltd., and PineBridge Investments LLC, and total quotas of USD1.585 billion were granted to three qualified domestic institutional investors (QDIIs), including Guosen Securities Co., Ltd., American International Assurance Company, Ltd., and Lion Fund Management Co., Ltd. As of April 29, 2011, the SAFE had approved investment quotas of USD20.690 billion to 103 QFIIs and investment quotas of USD72.646 billion to 92 QDIIs. Specifically, during the period from January to April 2011, investment quotas of USD970 million were allocated to 13 QFIIs, and quotas of USD2.985 billion were allocated to 8 QDIIs. Based on the changes and development in Chinas balance of payments, the SAFE will continue to examine and approve investment quotas for qualified institutional investors in a prudent and orderly manner. 2011-04-29/en/2011/0429/993.html
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I. Q: What is domestic and foreign currency exchange franchise business to individuals? A: The domestic and foreign currency exchange franchise business to individuals in the expanded pilot implementation refers to two-way currency exchange services (foreign currencies to RMB and vice versa) for domestic/overseas individuals in the localities of the pilot implementation, which are provided by domestic non-financial enterprises after approval of the SAFE. Internationally, a multi-level service system has been put in place for the provision of domestic and foreign currency exchange franchise business to individuals to meet the needs of diversified groups and the set up special client services composed of many levels. The providers of the domestic and foreign currency franchise exchange business to individuals generally include: bank outlets, foreign currency exchange franchise entities, and foreign currency exchange agencies. By nature, the Chinese institutions engaging in the pilot implementation of domestic and foreign currency exchange franchise business to individuals fall into the category of foreign currency exchange franchise entities, which are similar to the exchange shops in foreign countries. II. Q: What is the reason for the expanded pilot implementation? A: The provision of authority to general enterprises (other than banks) to deal in domestic and foreign currency exchange businesses to individuals is an important measure to improve currency exchange services for individuals, to diversify foreign exchange service providers, as well as to fulfill the requirements of the Regulations of the People's Republic of China on Foreign Exchange Administration. On August 20, 2008, the SAFE granted approval to Beijing and Shanghai for pilot implementation of domestic and foreign currency exchange business to individuals, with each city being allowed to select one franchise institution for implementation. The implementation has achieved the expected results and has received a positive response from the public. A number of regions and institutions have applied for pilot implementation of domestic and foreign currency exchange business to individuals. The SAFE recently decided to incorporate 13 provinces, municipalities, and autonomous regions (including Beijing and Shanghai) and 4 cities specifically designated in the state plan into the pilot implementation of foreign exchange business to individuals, to increase the number of pilot institutions, to permit cross-regional chain operations, to streamline relevant procedures, and to carry out uniform supervision over the pilot implementation. Among the aforesaid regions, there are regions with a robust foreign-related economy and a vast amount of frequent commercial contacts, cities at the borders/ports or tourist hubs, and regions entitled to preferential policies, all of which have a certain amount of currency exchange needs. The expansion of the pilot implementation of domestic and foreign currency exchange business to individuals will supplement the inadequacy of the existing services. With the establishment of a service network integrating the strength of various institutions banks, franchise operations institutions, and foreign currency exchange agencies the SAFE will be able to increase its capacity to provide diversified services to clients, thus better fulfilling market demands. III. Q: What are the qualifications for applying for domestic and foreign currency exchange business to individuals? What are the procedures for approval? A: First, individuals are not allowed to apply for such business. Qualified applicants must be general commercial enterprises with independent legal-person authority (Chinese-funded or foreign-funded) located within the territory of China. The applicants should have registered capital of not less than RMB 1 million (for foreign-funded enterprises, the amount should be the foreign exchange equivalent of RMB 1 million), and should have engaged in foreign currency exchange for more than 6 months. Second, the applicants should have a certain number of in-house practitioners with good knowledge of the foreign currency exchange business and foreign exchange administration policies. Third, the applicants should have adequate venues, systems, facilities, and security for carrying out the business, particularly the hardware/software compatible with the uniform national information system for the administration of individual exchange settlement and sales. Enterprises with the above qualifications can submit applications to the branches of the SAFE (foreign exchange administration departments, hereinafter referred to as SAFE branches) located at their registered domicile. The SAFE branches shall, after receipt of the application materials, examine the qualifications of the applicants with respect to their handling of domestic and foreign currency exchange business to individuals. The application materials of the qualifying applicants shall be submitted to the SAFE for approval. The SAFE shall assess the level of local demand for domestic and foreign currency exchange to individuals, the risk-control ability of the applicant, and other objective conditions, in order to determine the timetable for granting approval and making appropriate adjustments in the number of franchise institutions. IV. Q: What are the specific requirements for the expansion of the pilot implementation? A: By drawing on the experience from the earlier pilot implementation and specifying the requirements for supervision of the institutions operating the franchises, the SAFE has worked out a set of nationally uniform and normative measures for an expanded pilot implementation in compliance with the regulations and in consideration of operational convenience. The requirements for the expanded pilot implementation mainly include: a) The operations institutions shall handle the currency exchange business via the information system for the administration of individual settlement and sales of foreign exchange and shall incorporate the amount of each clients currency exchange into the annual aggregate quota control for the individual settlement and sales of foreign exchange; b) To underscore the distinct feature (transactions in small amounts) of the currency exchange business to individuals, the cumulative amount of currency exchanged by the franchise operations institutions shall not exceed USD 5,000 on one day for a single client; c) All the operations activities of the franchise institutions shall be conducted via their accounts under the foreign exchange excess reserves and limitations shall be imposed on the foreign exchange excess reserves; d) The operations institutions shall, on a monthly basis, issue to the SAFE branches statements related to their currency exchange and shall fulfill their statistical and reporting responsibilities regarding the balance of payments, anti-money-laundering, etc; e) The SAFE shall comply with the principle of achieving an efficient geographic distribution of franchise institutions to meet market demands and encourage the development of chain operations by specifying the timetable for the granting of approval and by flexibly adjusting the number of franchise institutions for the orderly promotion of the pilot implementation. V. Q: What are the distinctive characteristics of the franchise operations institutions in comparison with bank outlets and foreign currency exchange agencies? A: In 2008 Chinas domestic and foreign currency exchange business (also known as exchange settlement and sales) to individuals amounted to approximately USD 170 billion, of which currencies exchanged by overseas individuals reached USD 24 billion. The market has revealed the great potential as well as the diversified needs of customers. The franchise operations institutions, bank outlets, and foreign currency exchange agencies are natural competitors and also complement one another in terms of their business. As compared to bank outlets and foreign currency exchange agencies, franchise operations institutions have their own distinctive characteristics: a) Presently about 90% of foreign currency exchange agencies serve as auxiliary facilities at foreign-related hotels catering to the exchange needs of hotel guests. As far as bank outlets are concerned, the majority of bank outlets are positioned to provide B2B services to customers, and most bank outlets are generally in areas of concentrated residents and public work. Only a few bank outlets are located in areas where there are few residents, such as airports, hotels, scenic spots, etc. In contrast, franchise operations institutions can install a distribution of outlets to meet changing market demands; b) Bank outlets are normally restricted to fixed working hours; some are even closed during holidays. Foreign currency exchange agencies are usually limited in terms of the geographic scope of their services. In contrast, franchise operations institutions are allowed to extend their business hours at any time based on market demands and at some airports can operate 24/7. c) Franchise operations institutions, as compared to foreign currency exchange agencies, are capable of handling two-way exchange and discretionary setting of prices. The strong expertise of the franchise institutions enables service staffers to identify bank notes of all major countries in a timely manner, to keep pace with the latest anti-counterfeiting techniques, and to interact with customers with sound language skills. VI. Q: Some border provinces such as Guangxi, Yunnan, and Xinjiang have been incorporated into the expanded pilot implementation. Can the settlement of border trade enjoy the services provided by the pilot implementation? A: The main purpose of the expansion is to facilitate operation of currency exchange to individuals, especially to satisfy the currency exchange needs of individuals in areas with frequent entries and exits. That also underscores a feature of the business, i.e., small transactions and operational convenience. The SAFE has incorporated some border provinces into the expanded pilot implementation and encourages franchise operations institutions located in border/port cities to provide currency exchange services for the currencies of the surrounding countries and regions. In the case that a currency cannot be exchanged via a deposit bank, the franchise operations institutions are allowed to carry out the exchange through other channels. This will facilitate legal operations of the local currency exchange business to individuals, and hence will help check illegal exchange transactions at their source. Nonetheless, such practices may not completely satisfy the needs for border trade settlement, which should mainly be conducted via banks. 2009-12-23/en/2009/1223/911.html
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The State Administration of Foreign Exchange (SAFE) recently issued the Circular of the SAFE on Relevant Issues Concerning the Management of Domestic Foreign Exchange Accounts of Overseas Institutions (hereinafter referred to as the Circular). A person-in-charge of the SAFE was interviewed on the relevant contents of the Circular. Q: What are the purposes and significance of issuing the Circular? A: In order to cope with the global financial crisis, the CPC Central Committee and the State Council have reiterated that efforts shall be strengthened to support economic development through financing, and the role of financing to bolster economic growth and to foster structural adjustments shall be given better play by implementing various measures. Emphasis has also been placed on deepening financial reform, strengthening risk prevention, and effectively maintaining financial security and stability. The issuance of this Circular is indicative of the efforts of the SAFE to fulfill the above requirements of the CPC Central Committee and the State Council. On the one hand, the Circular allows all domestic banks to open foreign exchange accounts for overseas institutions under the premise of prudent operations, and it streamlines the procedures for the examination and verification of documentary evidence for the account opening and overseas fund transfers by overseas institutions. These efforts are conducive for banks to broaden the scope of intermediary businesses and to facilitate fund management of go-globalenterprises so as to safeguard fund security, and consequently will enhance the capacity of banks and enterprises to cope with the global financial crisis. On the other hand, the Circular standardizes the identification mark of the foreign exchange accounts of overseas institutions as well as the rules on the declaration of balance of payments statistics, and clarifies that the cross-border transaction principle shall be applied to the examination of the authenticity of fund receipts and payments from/to domestic parties. Furthermore, the funds in the domestic foreign exchange accounts of overseas institutions shall be incorporated into the banks external debt management. Thus a firewall between the accounts of domestic institutions and the account of overseas institutions is established to prevent illegal inflows and outflows of funds via the domestic foreign exchange accounts of overseas institutions. Q: What is the main content of the Circular? A: The Circular allows qualified Chinese-funded banks and foreign-funded banks to open foreign exchange accounts and to provide financial services for overseas institutions after examining and verifying the authenticity and legitimacy of the opening of the domestic foreign exchange accounts by overseas institutions. However, the opening of special foreign exchange accounts by foreign investors and foreign exchange accounts of qualified overseas institutional investors etc. shall be subject to approval by the Foreign Exchange Administrations according to the regulations. The Circular also requires that domestic banks make identifying marks on the domestic foreign exchange accounts of overseas institutions and incorporate these accounts into relevant information system for uniform management. The receipts and payments from/to domestic institutions (individuals) by the said accounts shall be subject to cross-border transaction administration. Domestic banks must examine and verify valid commercial documents and vouchers as required and declare the balance of payments statistics according to the relevant regulations. The account funds are categorized as non-resident deposits, and accordingly shall be incorporated into the short-term external debt balance quota of the opening banks. Cash withdrawals from the accounts and foreign exchange settlements in a direct or disguised manner are prohibited unless approved by the Foreign Exchange Administrations. Domestic banks shall abide by the anti-money laundering regulations, such as the know your customer principle, the large-sum and suspicious transaction reporting system, and so forth. The Circular is not applicable to the opening and use of offshore foreign exchange accounts at offshore banking departments of domestic banks that have obtained offshore banking business qualifications in accordance with the law, and is also not applicable to the opening and use of foreign exchange accounts within China by overseas individuals. Q: What does the Circular specify for foreign exchange accounts opened at domestic banks by banks registered overseas? A: Banks registered overseas are identified as overseas institutions in the Circular, and all provisions in the Circular are applicable to the foreign exchange accounts opened by such banks at domestic banks. Such provisions include real-name accounts, affixing the NRA identification, free fund transfers from abroad, incorporating the funds in such foreign exchange accounts into the short-term external debt balance quota of the domestic opening banks, prohibiting cash deposits and withdrawals and prohibiting foreign exchange settlement, and so forth. Since the majority of the accounts opened by such banks at domestic banks are foreign exchange accounts of inter-bank deposits, which are relatively small in terms of their total amount, only involve overseas transfers, and are already covered in the balance of payments statistics, the foreign exchange accounts opened by these banks at domestic banks are not required to be incorporated into the foreign exchange account management information system, and are not subject to registration of the basic information, application of the special institutional code, and so forth. Q: What does the Circular specify in terms of monitoring and supervising the adoption of uniform identification of the domestic foreign exchange accounts of overseas institutions and in terms of submission of the information and so forth? A: In order to strengthen the monitoring and supervision over foreign exchange fund flows, to facilitate the handling of statistics and business, as well as to provide differentiation from offshore foreign exchange accounts (OSA foreign exchange accounts), the Circular requires that the identification NRA (NON-RESIDENT ACCOUNT) be marked on the form for domestic foreign exchange accounts of overseas institutions with NRA + the foreign exchange account number.From the banks perspective, no uniform requirements are imposed on the specific forms for marking the NRA identification. This provides the banks with the latitude to make the identification directly before the account number or to use alternative technologies such as a matching system for the NRA identification, on the condition that the identification is presented in the form of NRA+ the foreign exchange account number, enabling the payer and payee of foreign exchange funds to effectively identify the nature of the account. The Circular also requires that the domestic foreign exchange accounts of overseas institutions be incorporated into the foreign exchange account management information system. The domestic banks shall submit detailed information about the account opening, balance, receipt, and payment of the domestic foreign exchange accounts of overseas institutions via the system to the Foreign Exchange Administrations. The Foreign Exchange Administrations will notify the domestic banks separately regarding the specific time for submission of the information, based on the situation for upgrading and transforming the foreign exchange account management information system, the preparation of the banks, and so forth. The domestic banks shall make relevant preparations and submit the information about the declaration of the balance of payments statistics, the information about the non-resident deposits under the item of short-term external debt balanced management, and so forth. 2009-07-13/en/2009/0713/895.html