For the purpose of further standardizing domestic and foreign currency exchange franchise business for individuals and foreign currency exchange business, the relevant issues are notified as follows, in accordance with the Administrative License Law, Regulations on Foreign Exchange Administration, the Interim Measures for Administration of Foreign Currency Exchange Agencies (the Decree of the People’s Bank of China (No. 6 [2003]), and the Circular of the State Administration of Foreign Exchange on Printing and Distributing the Measures for Administration of the Pilot Program on Domestic and Foreign Currency Exchange Franchise Businesses for Individuals(Huifa No. 27 [2012]):

I. Further enhancing administration of market access of franchised institutions engaging in domestic and foreign currency exchange for individuals (the franchised institutions).For the franchised institutions newly established or with equity transfer, the branches of the State Administration of Foreign Exchange (including the foreign exchange administrative departments, hereinafter referred to as the SAFE branches) shall earnestly carry out onsite inspection and acceptance, strictly examine the qualifications, equity structure of the applying institutions and the business background of the transferee, and shall adequately take into consideration the actual demand of local individuals for domestic and foreign currency exchange, so as to rationally control the frequency of approval of franchised institutions and avoid excessive competition.

II. Further reinforcing day-to-day business management of franchised institutions and foreign currency exchange agencies

(I) Franchised institutions and foreign currency exchange agencies shall carry out daily operation activities within the business scope, and perform various statistics and reporting obligations, in strict accordance with the relevant regulations.

(II) Authorized banks shall strengthen administration and monitoring of foreign currency exchange agencies. Once the foreign currency exchange agencies that have conducted exchange business in violation with relevant regulations are identified, the banks shall correct them in a timely manner and report such cases to the local SAFE branches.

(III) All SAFE branches shall establish a working mechanism for onsite and offsite verifications of franchised institutions, strengthen day-to-day monitoring and administration of franchised institutions, and learnthe construction and implementation of their internal control systemsso as to guard against illegal publicity, investment invitation and operation beyond the scope. The SAFE branches shall reinforce communications with each other, investigate and grasp the situations of branch establishment by local franchised institutions in other regions, and by non-local franchised institutions in this locality, and track their business developments. 

III. Dealing with the irregular operational activities of franchised institution and foreign currency exchange agencies. For franchised institutions that carry out business without authorization, run business beyond the approved scope or are suspected of engaging in online foreign exchange speculation, the SAFE branches shall suspend or cancel their qualification for conducting a pilot program on domestic and foreign currency exchange franchise business for individuals. For foreign currency exchange agencies, the SAFE branches shall urge authorized banks to suspend or cancel their foreign currency exchange business in a timely manner.

For franchised institutions thathave engaged in the afore-mentioned activities since the implementation of the Measures for Administration of the Pilot Program on Domestic and Foreign Currency Exchange Franchise Businesses for Individuals, they shall be handled in accordance with the preceding paragraph. 

IV. The SAFE branches shall, upon receipt of this Circular, promptly forward it to the central sub-branches and sub-branches of the SAFE as well as to the commercial banks and franchised institutions, within their respective jurisdiction.

The General Affairs Department of the State Administration of Foreign Exchange

February 12, 2015