Circular of the SAFE Concerning Further Improving Administration of the Foreign Exchange Settlement and Sale Business for Individuals_Rules and Regulations

Rules and Regulations

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2009-12-23
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State Administration of Foreign Exchange
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Circular of the SAFE Concerning Further Improving Administration of the Foreign Exchange Settlement and Sale Business for Individuals

Circular of the SAFE Concerning Further Improving Administration of the Foreign Exchange Settlement and Sale Business for Individuals

The branches and foreign exchange administration departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government; the branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo; and all designated Chinese-funded foreign exchange banks:
In order to further improve administration of individual foreign exchange settlement and sale, effectively check individualsevasion of supervision over the limitation on the aggregate amount by means of fund splitting and so forth, and standardize foreign exchange settlement of individuals by presenting foreign currency notes, the relevant issues are hereby notified as follows:
` No individual shall evade administration of the annual aggregate amount of individual exchange settlement and individual exchange purchases within the territory of China by means of fund splitting and so forth. Generally, individual settlement and sales of foreign exchange through splitting are characterized by the following:
1. One individual/organization outside the territory of China remits foreign exchange to 5 or more different individuals on the same day/every other day/or on successive days, and these payees separately carry out the exchange settlement.
2. Five or more different individuals remit foreign exchange to the same individual/organization outside the territory of China after separately purchasing foreign exchange on the same day/every other day/or on successive days.
3. Five or more different individuals deposit/remit RMB funds into the RMB account of the same individual/organization after separately settling the exchange on the same day/every other day/or on successive days.
4. An individual withdraws foreign currency notes close to an equivalent of USD10,000 five or more times within 7 days from the same foreign exchange savings account; or five or more individuals jointly settling the exchange of foreign currency notes on the same day at the same bank outlet with each individual settling the equivalent of close to USD5,000.
5. The same individual transfers deposits from his/her foreign exchange savings account to more five or more direct relatives who then complete the exchange settlement within the limit on the annual aggregate amount; or five or more direct relatives of the same individual transfer foreign exchange purchased within the limit on the annual aggregate amount to his/her foreign exchange savings account.
6. Other acts by which individuals complete exchange settlement and sale by splitting many times through the agency of many persons for the purpose of evading administration of the limitation.

a When banks identify any individual application for exchange settlement and sale in conformity with any of the characteristics stated in Article 1 of this Circular, the banks shall handle the application in accordance with the following provisions:
1. The banks shall reject individuals applications for foreign exchange settlement and sale bearing the distinct characteristics of splitting which can be identified by the banks as exchange settlement and sale by splitting.
2. In the event that the foreign exchange settlement and sale by individuals conform with any of the aforesaid characteristics, whereas the settlement and sale cannot be identified by the banks as foreign exchange settlement and sale through splitting, the banks shall, if under the current account, require the involved individuals to submit the relevant certifications stating the transaction amount in compliance with the principle of authenticity verification of foreign exchange collection and payment under the current account before handling the business; if the applicants fail to submit the relevant certifications, the banks shall reject the applications. If under the capital account, the banks shall handle the relevant business in accordance with the regulations concerning administration of individual capital accounts, such as Chapter b of the Detailed Rules for the Implementation of Measures for Individual Foreign Exchange Administration.
3. When an individual is identified by the bank in an ex-post examination as a suspect involved in foreign exchange settlement and sale through splitting, the bank shall make efforts to collect the relevant evidence to prevent fund splitting conducted by the same individual. At the same time, the bank shall also report the situation within 3 working days from the date of identification to the SAFE branches or sub-branches in the localities where the banks are located (hereinafter referred to as SAFE branches).
b Individual applications for exchange settlement by presenting foreign currency notes shall be handled in accordance with the following provisions:
1. When an individual who has not exceeded the limit on the annual aggregate amount of exchange settlement settles the exchange by presenting foreign currency notes, the settlement of foreign currency notes with a total sum on the same day equivalent to USD5,000 or less shall be handled at the bank by presenting a valid identity certificate for the said individual; when the total sum of the exchange settlement exceeds the equivalent of USD5,000, the business shall be settled at the bank by presenting the valid identity certificate of the said individual, the Declaration Form of Incoming Passengers at Customs Entries of the PRC (hereinafter referred to as Customs Entry Declaration Form), or vouchers for the withdrawal of foreign currency notes from the bank where the said individual had previously deposited his/her money.
2. When an individual who exceeds the limit on the annual aggregate amount for exchange settlement conducts exchange settlement by presenting foreign currency notes, if under the current account, the business shall be handled at the bank by presenting the valid identity certificate of the said individual, his/her Customs Entry Declaration Form, or vouchers for the withdrawal of foreign currency notes from the bank where the said individual has previously deposited money and the relevant certification stating the transaction amount as prescribed in Chapter II of the Detailed Rules for the Implementation of the Measures for Individual Foreign Exchange Administration (Huifa [2007] No.1); if under the capital account, the business shall be handled at the bank by presenting a valid identity certificate for the said individual, his/her Customs Entry Declaration Form, or vouchers for the withdrawal of foreign currency notes from the bank where the said individual previously had deposited his/her money and in accordance with the regulations on the administration of individual capital accounts such as Chapter III of the Detailed Rules on the Implementation of the Measures for Individual Foreign Exchange Administration.
c Individual foreign exchange purchases of funds for non-operational purposes under the current account shall be limited to cash in RMB or funds in the RMB account/bankcard of the said individual or his/her direct relatives.
d The pilot institutions for the franchise business of domestic and foreign currency exchange for individuals shall, to the same extent as banks, comply with the provisions of this Circular.
e Banks, pilot institutions for the franchise business of individual domestic and foreign currency exchange, and individuals shall act in strict compliance with the Measures for Individual Foreign Exchange Administration (Decree No.3 [2006] of the Peoples Bank of China), the Detailed Rules for the Implementation of the Measures for Individual Foreign Exchange Administration, and the provisions of this Circular. For any act in breach of this Circular a penalty shall be imposed by the SAFE branches in accordance with Articles 47 and 48 of the Regulations of the Peoples Republic of China on Foreign Exchange Administration (Decree No. 532 of the State Council of the PRC, August 5, 2008), and other relevant regulations.
f This Circular shall take effect as of the date of promulgation.
The branches and foreign exchange administration departments of the SAFE shall, upon receipt of this Circular, promptly transmit this Circular to the sub-branches, municipal commercial banks, rural commercial banks, foreign banks, and pilot institutions for the franchise business of domestic and foreign currency exchange for individuals within their respective jurisdictions; all the designated Chinese-funded foreign exchange banks shall transmit this Circular at the earliest possible date to the branches within their jurisdictions. For any problems arising from implementation of this Circular, please provide feedback to the SAFE in a timely manner.
November 19, 2009

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