The Payment and Settlement Department of the People's Bank of China, 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, and the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, and the designated Chinese-funded foreign exchange banks:
To actively support the development of cross-border e-commerce, and guard against the risksarising fromonline foreign exchange payments, the SAFE has formulated the Guidance on the Pilot Program of Cross-border Foreign Exchange PaymentBusiness Through Payment Institutions ("Guidance", see Annex) based on the lessons and experience gained in the preliminary stage to pilot cross-border foreign exchange payment business through payment institutions across the country, which is hereby printed and distributed for implementation.
The SAFE branches and foreign exchange administration departments (hereinafter referred to as the "SAFE branches") shall select the payment institutions with actual demand, compliant operations and mature business and technical conditions to participate in the pilot program of cross-border foreign exchange payment business, and register them on the List of Enterprises Making Foreign Exchange Receipts and Payments under Trade, in accordance with the Guidance. The SAFE branches shall strictly review the payment institutions participating in the pilot program in accordance with the principle of prudence, and improve the quality of such review by strengtheningtheir communication with the payment and settlement administration departments of the local branches of the People's Bank of China (PBC) through ex-ante consultation or ex-post notification, as the case may be.
The SAFE branches shall, upon receipt of the Circular, promptly forward it to the central sub-branches (sub-branches), local commercial banks and foreign-funded banks under their respective jurisdiction. All designated Chinese-funded foreign exchange banks shall, upon receipt of the Circular, promptly forward it to their branches. Any problemsthat occur during the implementation of the policy shall be promptly reported to the Current Account Management Department of the State Administration of Foreign Exchange.
Appendix: Guidance on the Pilot Program of Cross-border Foreign Exchange Payment Business through Payment Institutions
State Administration of Foreign Exchange
January 20,2015
Appendix
Guidance on the Pilot Program of Cross-border Foreign Exchange Payment Business Through Payment Institutions
Chapter One General Provisions
Article 1. In order to facilitate domestic institutions and individuals to carry out e-commerce transactions via the Internet, regulate cross-border foreign exchange payment business through payment institutions, and guard against the risks arising from cross-border capital flows through the Internet, this Guidance is hereby formulated in accordance with the Regulations of the People's Republic of China on Foreign Exchange Administration, the Measures for the Administration of Payment Services of Non-financial Institutions, and other relevant provisions.
Article 2.Cross-border foreign exchange payment business through payment institutionsrefer to the centralized receipts and payments, and relevant settlement and sales of foreign exchange funds that are involved in online cross-border payments made by payment institutions through banks to the parties of e-commerce transactions (trade in goods or trade in services).
Article 3.Payment institutions providingcross-border foreign exchange payment services shall be subject to the supervision and administrationof the SAFE and its branches ("foreign exchange authorities"), and promptly submit relevant business data in accordance with relevant regulations.
When serving the payment institutions, banks shall strictly examine the qualifications and business scopes of the payment institutions with reasonable diligence, refuse to handle the abnormal transactions, and ensure the prompt and accurate input of relevant data.
Domestic institutions and individuals shall not obtain or transfer foreign exchange funds with fictitious transaction, or evade foreign exchange regulation by split-up. Entities engaged in cross-border e-commerce shall also comply with the laws and regulations of other relevant departments of the state.
Chapter Two Application for Participation in the Pilot Program
Article 4. A payment institution may join the pilot program of cross-border foreign exchange payment business after registering on the List of Enterprises Making Foreign Exchange Receipts and Payments under Trade. Any payment institution applying for the registration on the List of Enterprises Making Foreign Exchange Receipts and Payments under Trade shall satisfy the following requirements:
(I) Holder of the Payment Business License issued by the People's Bank of China (PBC), with "online payment" included in the permitted business scope;
(II) No material violation of the regulations on the RMB and foreign exchange administration in the past 2 years;
(III) With a sound organizational structure, and sound business process rules and risk management systems;
(IV) With the technical conditions for collecting and keeping the transaction data, and the ability to ensure the authenticity and security of the transactions.
Article 5. Any payment institution applying for the registration on the List of Enterprises Making Foreign Exchange Receipts and Payments under Trade shall present the following documents to the foreign exchange authority at the place of incorporation:
(I) Written application, stating the applicant's informationsuch as name, place of incorporation, registered capital, equity structure, organizational structure, and the types and scopes of existing payment business and the cross-border foreign exchange payment business being applied for;
(II)Business operation plan, including business processing procedures (specify in detail the complete procedures of transactions, exchanges and payments by business type), customer real-name system management, review of the authenticity of transactions, declaration of the balance of payments statistics, data collection and submission, system construction, data interface between system and banks, system emergency response plan, foreign exchange reserve account management, risk control related to the business conducted, internal operational rules, and compliance management;
(III)The duplicates and photocopies of the Payment Business License, Business License for Enterprise as Legal Person, and Organization Code Certificate;
(IV)Cooperation agreement with bank(s);
(V) Other materials required by the foreign exchange authority.
Article 6. The SAFE branches and foreign exchange administration departments (hereinafter referred to as the "SAFE branches") shall review the application materials submitted by the payment institutions in accordance with the Guidance, and issue official written documents to the qualified payment institutions within 20 working days and report them to the SAFE, and register the payment institutionsapplying to engage in cross-border foreign exchange payments under trade in goods on the List of Enterprises Making Foreign Exchange Receipts and Payments under Trade.
The payment institutions that have engaged in the pilot business before the implementation of this Guidance are not required to make application again. The SAFE branches at the places of their incorporation shall uniformly handle the registration for the List of Enterprises Making Foreign Exchange Receipts and Payments under Trade.
During the pilot period, any payment institution shall complete filing procedures with the SAFE branches at the place of its incorporation by presenting the operation plan or the cooperation agreement with banks in relation to the new business in case of any change to the informationsuch as business scope and opening bank for the foreign exchange reserves.
Chapter Three Business Management
Article 7. Any payment institution shall strictly review the authenticity of the identity information of customersto make cross-border foreign exchange payment business through it, and keep relevant information for 5 years for future reference. The information of individual customers to be kept includes but is not limited to name, nationality and valid ID number; the information of institutional customers to be kept includes but is not limited to name and organization code.
Where a payment institution develops overseas merchants independently, it shall guarantee the authenticity and legitimacy of the overseas merchants in accordance with the principles of Know Your Customer, Understand Your Business, and Due Diligence.
Article 8. The cross-border foreign exchange payment business shall be conducted for true and legitimate trade in goods or in services. Payment institutions shall not provide cross-border foreign exchange payment services to the following trading activities: the trade in goods or the trade in services that is not in compliance with the import and export management regulations of the state; the commodity trade without consideration generally accepted by the market, and the intangible commoditytrade with an unclear pricing mechanism and potential risks; the projects and operating activities that may endanger the state and society or harm the social and public interests; and the projects expressly prohibited by laws and regulations, or the rules and regulations of the PBC and foreign exchange authorities.
Article 9. Where a payment institution participates in the pilot program of cross-border foreign exchange payment business, the amount of a single transaction shall not exceed the equivalent of USD50,000, unless otherwise provided. Where a payment institution fails to sufficiently verify the completion of transactions or fails to implement, against relevant merchants, the classified management of the enterprises on the List of Enterprises Making Foreign Exchange Receipts and Payments under Trade in Goods in accordance with relevant regulations, the foreign exchange authority may downgrade the limit on a single transaction of the said payment institution to the equivalent of USD10,000.
Article 10. A payment institution may provide centralized receipts, payments, settlement and sales of foreign exchange for customers, and restore transaction information on a transaction-by-transaction basis in accordance with the requirements of this Guidance. The payment institution shall complete the settlement and sales of foreign exchange on the first working day (T+1) following the date of receiving funds (T). The payment institution may handle net settlement provided it satisfies the requirements for restoring transaction information on a transaction-by- transaction basis.
Article 11.In providing cross-border foreign exchange payment services, a payment institution shall allow its customers to make payment in RMB or self-owned foreign exchange. When a customer transfers foreign exchange to the payment institution, the bank shall require the customer to provide the materials evidencing the authenticity of online transactions, which contain information such as the transaction amount and the name of the payment institution, provide the transfer service after verifying the account name of the payment institution and the amount, and indicate the wording of "Online Cross-border Foreign Exchange Payment & Transfer" in the transaction remark.
Article 12.In providing foreign exchange settlement and sales services to its customers, a payment institution shall use the posted exchange rate, and shall not change the exchange rate by itself. The payment institution shall reach prior agreements with its customers in respect of service fees and the sharing of exchange gains or losses involved in transaction refunds.
Chapter Four Account Management
Article 13. Any payment institution shall strictly distinguish the funds under customers’ foreign exchange reserve accounts and its own foreign exchange funds and shall not mix them for use. The payment institution shall open accounts for and use its own foreign exchange funds in accordance with the existingregulations on the administration of institutions' foreign exchange.
Article 14. A payment institution shall open a foreign exchange reserve accountwith banksin accordance with the existing regulations relating to foreign exchange account management by presenting a written document evidencing the registration on the List of Enterprises Making Foreign Exchange Receipts and Payments under Trade issued by the foreign exchange authority at the place of its incorporation; the name of the account shall be ended with “PIA” (Payment Institute Account).
The payment institution shall provide foreign exchange settlement and sales and cross-border payment and receipt services to customers through the foreign exchange reserve account. The reserve account management shall be in compliance with the PBC's regulations on reserve account management.
Article 15. The receipts under a foreign exchange reserve account include foreign exchange transfer from the foreign exchange reserve account of the same name, a domestic payer’s transfer of foreign exchange or inward transfer of foreign exchange purchased, foreign exchange transfer from an overseas payer, and foreign exchange returnedthrough the same route and in the same currency for reasons such as transaction failure; while the payments from the account include foreign exchange transfer to a foreign exchange reserve account of the same name, transfer of foreign exchange to a domestic payee, transfer of settledforeign exchange to the RMB reserve account or the payee’s RMB account, remittance to an overseas payee, and the foreign exchange returnedthrough the same route and in the same currency for reasons such as transaction failure.
Cash withdrawal or deposit, and prepayment or pre-deposit without an underlying transaction are not allowed under foreign exchange reserve accounts. However, foreign exchange transfer in accordance with regulations is acceptable between the foreign exchange reserve account of the payment institution and its own foreign exchange account for reasonssuchas operating profit or loss.
Article 16.A payment institution shall open a foreign exchange reserve account with a commercial bank qualified for deposit and management of customers’ reserves. The foreign exchange and RMB reserves shall be deposited in and managed by the same bank, while the partner bank for foreign exchange reserves can be selected at its sole discretion and based on its actual needs.
Article 17. The foreign exchange reserve accounts of payment institutions shall be managed in the foreign exchange account management information system, under the category “foreign exchange reserve accounts of payment institutions (1603)”, and banks shall input and report data to the foreign exchange authoritieson a timely basis.
Chapter Five Information Collection
Article 18. A payment institution shall submit relevant business data and information in accordance with the requirements of this Guidance, and ensure the accuracy, completeness and consistency of the data.
Banks shall submit relevant information based on the data provided by payment institutions, in accordance with relevant regulations on the declaration of the balance of payments and on the submission of foreign exchange settlement and sales information. Except for the information required to be restored on a transaction-by-transaction basis, the information of other transactions shall be accurately submitted based on the information on the actual business of the banks. The transaction information involving netting shall also be submitted on a restoration basis, and the specific submission requirements shall be implemented in accordance with Articles 20, 21 and 22 under this Guidance.
Article 19.In handling cross-border foreign exchange payment business, a payment institution shall acquire the true transaction information, collect the detailed data of each transaction under the principles of completeness and traceability, and keep them for future reference.
The detailed data under trade in goods shall, in principle, include the name and quantity of the subject matter, transaction currency, amount, parties of transaction and countries they are from, and order time; the detailed data under trade in services shall, in principle, include the type of service, specific transaction information (such as the scheduled flight and time under air ticket, the hotel name and time of accommodation, letter of admission under overseas study, etc.), quantity, transaction currency, amount, parties of transaction and their location, and order time.
Article 20. A payment institution shall declare the following two categories of data for the balance of payments statistics in accordance with the existing regulations on the declaration of foreign-related receipts and payments data: (I) data of actual receipts and payments by the payment institution during centralized receipts and payments or net settlement (hereinafter referred to as the “data of actual receipts and payments”); and (II) data of original receipts and paymentsrestoredtransaction-by-transaction prior to centralized receipts and payments or net settlement (hereinafter referred to as the “restored data”).
For declaration of data of actual receipts and payments, the payment institution shall indirectly declare the balance of payments statistics according to actual transactions with banks, while the banks shall indicate the transaction code as “999999” for the actual receipts and payments, and the declaring entity as the payment institution. Where the actual receipts and payments become zero after net settlement, the payment institution shall report a virtualized transaction settled at zero, in which the names of payer and payee are the payment institution itself, the transaction code is “999998”, the nationality is “China”, and other required items are declared based on situations or as “N/A” (in capital letters).
For declaration of restored data, the payment institution shall, on the same day of declaring data of actual receipts and payments, provide the datarestored transaction-by-transactionunder the principle of full receipt and full payment, and declare through banks the restored data on cross-border receipts and payments of customers actually using foreign exchange. Where the amount of customer’s single transactionrestored is below the limit for exemption from balance of payments declaration, the payment institution shall, based on the nature of actual transactions, combine the data of the transactions of same nature (i.e., with the same transaction code) into one transaction, and declare in its name the restored datatransaction by transaction after the combination. Where the amount of customer’s single transactionrestored is above the limit for exemption from balance of payments declaration, the payment institution shall declarein the names of customersthe restored data transaction by transaction.
Article 21. A payment institution shall provide or fill in on a centralized basis the basic information and declaration information of restored data, in a manner determined through consultation with banks; filling in the printed declaration form is not compulsory.
A domestic bank shall fill in the transaction code and transaction remarksbased on the nature of actual transactions, prepare the declaration number based on the date of actual receipt and payment, and indicate the “bank transaction number” of restored data as the declaration number of the corresponding data of centralized receipt and payment, in order to establish a correlation between the data of actual receipts and payments and the restored data.
The domestic bank shall complete reporting of the basic information of the restored data prior to 12:00 at noon of the 1st working day (T+1) following the date of actual receipt and payment by the payment institution (T); and complete reporting of the declared information of the restored data prior to 12:00 at noon of the 5th working day (T+5).
Article 22. A payment institution shall, in accordance with the existing regulations on foreign exchange settlement and sales, provide transaction-based information of foreign exchange purchase or settlement through a bank within the prescribed time limit, while the bank shall report the statisticsstatement of foreign exchange settlement and salesin accordance with the existing regulations. For foreign exchange settlement and sales transactions with individuals, the bank shall, based onthe data provided by the payment institution, record on a transaction by transaction basis in the Management System for Individual Foreign Exchange Settlement and Salesasingle transactionthat is worth the equivalent of USD500 and below after summation by currency and nature of transaction on behalf of the payment institution, and a single transaction that is worth theequivalent of more than USD 500 within 5working days following the date of the transaction (T+5). The payment institution shall not add the amount of foreign exchange settlement and sales to individuals under cross-border foreign exchange payment to the annual aggregate of foreign exchange settlement and sales to individuals.
Article 23. A payment institution shall, by the 10th day of each month, report through the forms system to the foreign exchange authority at the place of its incorporation the total amount and number of cross-border foreign exchange payments by customers. For customers with monthly foreign exchange receipts and payments exceeding the equivalent of USD 200,000, the paymentinstitution shall report their transactions as those in a significant accumulated amount of receipts and payments. The paymentinstitution shallalso report to the foreign exchange authority on a timely basis in case of abnormalities or high risksas the transaction is being carried out.
The payment institution shall submit the annual pilot summary report as required by the local SAFE branch.
Chapter Six Supervision and Verification
Article 24. The SAFE branches shall prudentially supervise the pilot business, and carry out offsite and onsite verifications on the foreign exchange payment business of the payment institutions under their respective jurisdiction in accordance with this Guidance and relevant regulations on foreign exchange administration. The SAFE branches at the places of the incorporation of the payment institutions shall be chiefly responsible for verifying the payment institutions. The payment institutions and their opening banks shall be obliged to cooperate with the supervision and administration of the foreign exchange authorities.
Article 25. The SAFE branches may order the payment institutions to carry out self-checks of the abnormal transactions discovered during their routine monitoring. The payment institutions shall complete the self-checks in time in accordance with the requirements of the SAFE branches, and submit the self-check report.
Article 26. The SAFE branches shall independently make arrangements for the onsite verifications or inspections of the payment institutions under their jurisdiction, based on the aggregate of foreign exchange payments and theratiosof business volume and business characteristics of the payment institutionsunder their jurisdiction. The contents of onsite verifications shall include but be not limited to review of the information related to the payment institutions, the authenticity of transactions, information collection and retention, and the scope of actual business.
Article 27. Where a payment institution providing cross-border foreign exchange payment services fails to pass the authenticity reviewor satisfy the requirements on information collection and retention, the foreign exchange authority shall have the right to adjust the business scope and transaction limit of the payment institution or suspend its qualification for handling the cross-border foreign exchange payment business. After the payment institution make corrections, it shall be re-approved by the SAFE branch at its place of incorporation before resuming the pilot business.
Article 28. The foreign exchange authorities shall punish the payment institutions that violate the relevant regulations of this Measure inhandling foreign exchange payment business, in accordance with the Regulations of the People's Republic of China on Foreign Exchange Administration and other laws and regulations, andwhere the circumstances are serious, shall disqualify them for handling foreign exchange payment business.
Article 29. The Circular shall come into effect as of the date of issuance, and the Circular of the General Affairs Department of the State Administration of Foreign Exchange on Implementing the Pilot Program of Foreign Exchange PaymentsThrough Payment Institutions for Cross-border E-Commerce (Huizongfa No.5 [2013]) shall be repealed at the same time.
Article 30. This Guidance shall be construed by the SAFE.
