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Rules and Regulations
  • Index number:
    000014453-2015-00287
  • Dispatch date:
    2015-07-01
  • Publish organization:
    State Administration of Foreign Exchange
  • Exchange Reference number:
  • Name:
    Reply of the SAFE to Franchised Institutions Providing Domestic and Foreign Currency Exchange for Individuals to Engage in Transport of Foreign Currency Banknotes into or out of the Territory and Foreign Currency Wholesale Business
Reply of the SAFE to Franchised Institutions Providing Domestic and Foreign Currency Exchange for Individuals to Engage in Transport of Foreign Currency Banknotes into or out of the Territory and Foreign Currency Wholesale Business

Tianjin Branch, Shanghai Branch, and Beijing Foreign ExchangeAdministrative Department of the State Administration of Foreign Exchange:

The Application for Approving TransForex (Tianjin) Currency Exchange Co., Ltd to Engage in Cross-border Transport of Foreign Currency Banknotes (Jinhuifa No. 128 [2014]),the Application of Shanghai Branch of the State Administration of Foreign Exchange for Approving Travelex Currency Exchange (China) Co., Ltd to Engage in Cross-border Transport and Wholesale of Foreign Currency Banknotes (Shanghai Huifa No. 138 [2014]), and the Application of Beijing Foreign Exchange Administrative Department of the State Administration of Foreign Exchange for Approving Beijing United Money Exchange Co., Ltd to Engage in Cross-border Transport of Foreign Currency Banknotes (Jinghui No. 162 [2014])have been received, and the Reply is hereby highlighted as follows

I. Approving TransForex (Tianjin) Currency Exchange Co., Ltd, Travelex Currency Exchange (China) Co., Ltd and Beijing United Money Exchange Co., Ltd (“Three Franchised Institutions”) to engage in transport of foreign currency banknotes into or out of the territory and foreign currency wholesale business (“banknote transport and wholesalebusiness”).

II. The scope of the banknote transport and wholesale business includes:

(I) determining the currency for transport in their sole discretion while taking into full consideration the market demand.

(II) choosing in their sole discretion the partners (limited to banks, other franchised institutions, or retail business departments of the Three Franchised Institutions) for the sales and purchases of foreign currency banknotesacross the country. Thesales and purchases of foreign currency banknotes with banks shall be cleared in foreign exchange.

III. In principle, the banknote transport and wholesale businesscan be carried out by the head offices of the Three Franchised Institutions only; if any branch is needed to engage in banknote transport, strict authorization and enhanced administration are required. For the requirements on the administration of banknote transport, please refer to the Regulations on the Administration of Banks’ Transport of Foreign Currency Banknotes into or out of the Territory of the PRC (Huifa No. 24 [2014]).

IV. The Three Franchised Institutions shall manage the operating and accounting of the banknote transport and wholesale business and the retail business separately, and handle the clearing through special accounts for the banknote transport and wholesale business of a franchised institution.

(I) The special accounts for the banknote transport and wholesale business of a franchised institution include special RMB and foreign exchange accounts, which can be used for the clearingfor the banknote transport and wholesale businessonly, and shall not be used for any other business purpose.

(II) The Three Franchised Institutions may open with a bank or designate an RMB account as thespecial RMB account, which can only be used for the clearing of funds for the businesses with other franchised institutions, and the retail business departments of the Three Franchised Institutions; the funds in the special RMB account can be transferred to a special foreign exchange account based on the business requirements; and profits can also be transferred out.

(III) To open a special foreign exchange account, the Three Franchised Institutions should first obtain the approval from your branches or foreign exchange administrative departments, with thelimits verified by your branches or foreign exchange administrative departments. Where more than one special foreign exchange account is opened, limits shall be verified respectively; funds in the special foreign exchange accounts can be transferred without limitation; any change to the limit should be approvedby your branches or foreign exchange administrative departments.

(IV) The special foreign exchange account can be used only for the clearing of funds for businesses with domestic banks, other franchised institutions, the retail business departments of the Three Franchised Institutions, and overseas cooperative institutions; and the funds in the special foreign exchange account can be converted into other foreign currencies without limitation.

(V) The Three Franchised Institutions may remit foreign exchange into their respective special foreign exchange account as theworkingcapital, or deposit foreign exchange purchased with RMB from the banks with which their special foreign exchange accounts are opened. The surplus working capital which is remitted with foreign exchange can be transferred out via theoriginal route; the foreign exchange purchased with RMB and deposited can be first settled into RMB funds with the original bank where the funds have been purchased, then the RMB funds can be transferred out.

(VI)The scope of utilization of a special foreign exchange accountincludes:

Receipts: working capital remitted inward or deposited through foreign exchange purchases, deposit of foreign exchange purchased using the funds in aspecialRMB account, proceeds from sales of foreign currency banknotes, interests received, funds transferred fromother special foreign exchange accounts, and other receipts approved by foreign exchange authorities.

Payments: excessive working capital remitted outward or transferred through foreign exchange settlement, payment for purchase of foreign currency banknotes, payment for foreign exchange settlement of profits, payment for account fees, funds transferred to other foreign exchange special accounts, and other payments approved by foreign exchange authorities.

V. Your branches orforeign exchange administrative departments  shall request the Three Franchised Institutions to regularly report the business they carry out, including but not limited to: overseas and domestic partners, opening and utilization of the special accounts for the banknote transport and wholesale business of a franchised institution, and business size. Meanwhile, supervision and guidance on the businesses carried out by the Three Franchised Institutions shall be strengthened through off-site and on-site verification.

VI. Your branches or foreign exchange administrative departmentsshall request the Three Franchised Institutions tocomply with domestic laws and regulations against money laundering and terrorism financing as they build business relationships or do business with their domestic and overseas partners, implement the relevant anti-money laundering and counter-terrorism financing system set out in the application documents, and perform the obligations of reporting anti-money laundering information in accordance with the requirements from the anti-money laundering departments of the local branches of the People’s Bank of China.

VII. Your branches or foreign exchange administrative departments shall disqualify the Three Franchised Institutions for carrying out the business if the following circumstances are found in the Institutions:

(I) Failure to effectively carry out the business after being approved or to provide sound foreign currency banknote wholesale services  to market players and conduct immediate rectification(including minor currencies and minor denomination foreign exchange banknotes).

(II) Engaging in money laundering in the name of banknote transport and wholesale and other activities inviolationofnational laws and regulations.

VIII. Article 45 of the Measures for Administration of the Pilot Program of Franchised Domestic and Foreign Currency Exchange Business for Individuals (Huifa No. 27 [2012]) is not applicable to the purchase of foreign currency banknotes by domestic franchised institutions engaging in domestic and foreign currency exchange for individualsusing RMB or foreign exchangefrom the Three Franchised Institutions; but the settlement shall be made using RMB or foreign currency reserve funds. Upon receipt of this Reply, each foreign exchange branch and administrative department shall immediatelyforwardit to the franchised institutions engaging in domestic and foreign currency exchange for individuals within their respective jurisdiction.

State Administration of Foreign Exchange

May 26 2015

 





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