In 2011, in the face of the complicated economic and financial situations both at home and abroad, the State Administration of Foreign Exchange (SAFE) actively implemented the decisions and arrangements of the CPC Central Committee and the State Council, emphasizing priorities, improving methods, and rigorously cracking down on cross-border flows of hot money. In 2011 the results of the phase of cracking down on hot money were achieved, with a total of 3,488 cases of activities in violation of the regulations on foreign exchange administration handled and investigated, with the amount of penalties and confiscations reaching RMB 503 million, more than twice the amount of the last year.
In 2011 the SAFE’s main tasks in cracking down on hot money included: First, striking a heavy blow, investigating, and handling major cases of activities in violation of the laws on foreign exchange administration in key areas. In 2011, seventeen major typical case involving a huge amount of money were investigated and punished; and cross-regional operations and irregular capital inflows to the real estate and financial markets, involving RMB 19.3 billion, and administrative penalties were imposed in eight such cases and fines were collected in the amount of RMB 187 million. Second, jointly handling and investigating the cases, rigorously cracking down on illegal and criminal activities with respect to foreign exchange, such as illegal banks. As of the end of November 2011, the SAFE and the public security departments had jointly exposed eighteen cases involving illegal banks, twenty cases involving the illegal sale and purchase of foreign exchange, and one case involving online foreign exchange speculation in the amount of RMB 71.7 billion, with 198 suspects caught red-handed and64 suspects thereof being prosecuted. The number of cases exposed and the number of suspects apprehended hit a record high. Third, emphasizing priorities. The SAFE, with a focus on financial institutions and large-scale enterprises, carried out special inspections in the areas of foreign exchange settlement of capital and short-term external debt, and rigorously punished enterprises, financial institutions, and individuals that borrowed external debt and carried out foreign exchange settlement in violation of the regulations on foreign exchange administration.
In 2012 the SAFE will abide by the risk limits, construct a system and mechanism for protection against the impact of cross-border capital flows, strictly implement law-based administration, further improve the methods and means of foreign exchange inspections, rigorously crack down on various activities in violation of the foreign exchange laws and regulations, guard against the risks of unusual flows of foreign exchange funds, and safeguard the economic and financial security of China.
