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Rules and Regulations
  • Index number:
    000014453-2015-00511
  • Dispatch date:
    2015-12-09
  • Publish organization:
    State Administration of Foreign Exchange
  • Exchange Reference number:
    Huifa No. 41 [2015]
  • Name:
    Circular of the State Administration of Foreign Exchange on Providing Domestic and Foreign Currency Exchange Services by Franchise Institutions for Individuals through the Internet
Circular of the State Administration of Foreign Exchange on Providing Domestic and Foreign Currency Exchange Services by Franchise Institutions for Individuals through the Internet

The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government, and the branches of the SAFE in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo:

To improve the domestic and foreign currency exchange services for domestic individuals, and facilitate and regulate the franchise domestic and foreign currency exchange business for individuals (“franchise business”), this Circular is hereby issued to clarify the issues regarding the provision of the exchange services by institutions that conduct the franchise business(“franchise institutions”) through the Internet.

I. For the purpose of this Circular, the term “exchange through the Internet” refers to the process during which a domestic individual places an order with a franchise institution for foreign currency banknotes or electronic traveler’s checks and completes payment for the order through electronic channels such as the Internet and mobile terminals, and withdraws the banknotes or traveler’s checks through an outlet of the franchise institution or other eligible outlet.

II. A franchise institution providing the exchanges through the Internet shall meet the following conditions:

(I) having a good credit standing, and being free from significant noncompliance with the regulations on the franchise business over the last 2 years;

(II) having a necessary administrative system in place for the business;

(III) having software & hardware facilities and personnel required by the business; and

(IV) other requirements imposed by the SAFE.

III. Prior to the provision of the exchanges through the Internet, the head office of a franchise institution should ensure that the business is filed with a branch or an administrative department of the State Administration of Foreign Exchange in a relevant province, autonomous region or municipality directly under the Central Government (“SAFE branch”) in writing or via email. The documents required for the filing include:

(I) the business process, roles and responsibilities of the personnel, description of the ordering system, management of the provision for payment, description of customer information validation, and the anti-money laundering system for the exchanges through the Internet;

(II) description of the ability to record each transaction of the exchanges through the Internet;

(III) copies of payment & settlement agreements with banks and third party payment institutions, cooperation agreements with partners, and exchange agreements with customers; and

(IV) other materials required by a SAFE branch.

IV. A SAFE branch shall verify the filings submitted by a franchise institution within its jurisdiction in an appropriate manner; if there is no dissent within 20 working days, the franchise institution can provide exchanges through the Internet at its sole discretion.

V. A franchise institution shall comply with the following requirements for the exchanges through the Internet:

(I) the ordering service may be provided to customers through channels such as proprietary website, a partner’s website or mobile terminal. For the ordering service provided through channels other than the proprietary website, the responsibilities of institutions and customers must be indicated on the ordering interface, and that the exchange service is provided by the franchise institution must be specified;

(II) the franchise institution may, based on its circumstances, provide compliant online payment channels (such as debit card online banking and third party payment) to customers, and input the completed payment into the individual foreign exchange monitoring system;

(III) the franchise business conducted by the franchise institution must not exceed the relevant requirements on the provision for payment and the exchange quota;

(IV) the franchise institution shall verify a customer's identity, ensure the ordering customer is the withdrawer, and keep the photocopies or electronic copies of the customer's personal ID certificate for the withdrawal;

(V) the head office of the franchise institution should include the separate statistics of the exchanges through the Internet in the current franchise business statements.

VI. The outlets for the withdrawal of foreign currency banknotes (including traveler’s checks) shall be owned by the franchise institution. A franchise institution approved to conduct nationwide franchise business may establish withdrawal outlets across the country at its sole discretion; if approved of conducting franchise business within the jurisdiction of a particular SAFE branch, the franchise institution may, at its sole discretion, establish outlets within the business range, but must not establish any outlet for offline withdrawal outside the jurisdiction.

For the addition of other types of outlets (limited to foreign currency exchange points under outlets of banks or other franchise institutions, or under the SAFE itself), a new outlet must be able to ensure the security of banknotes and travelers' checks and be equipped with video monitoring facilities, and the head office of the franchise institution is required to file with the local SAFE branch by presenting the following documents; if there is no dissent within 20 working days, the new outlet may commence doing business at its sole discretion:

(I) description and relevant qualification certificates of the withdrawal outlet (such as license of a financial institution, letter of confirmation for foreign currency exchange outlet, and license of domestic and foreign currency exchange franchise businesses for individuals);

(II) documents evidencing the existence of equipment and facilities for the withdrawal, including but not limited to monitor video and cash storage cabinet;

(III) cooperation agreement between both parties and their relevant management mechanisms; and

(IV) other materials required by a SAFE branch.

VII. Every SAFE branch should intensify ex-post regulation of the franchise institutions within its jurisdiction, prevent and timely address the default and compliance risks of the franchise institutions, protect the rights and interests of consumers, and watch out for the implementation of administrative measures regarding the authenticity and financial security of customers for the purpose of effective risk control during its daily regulation. Any abnormality must be immediately dealt with and reported to the SAFE.

VIII. This Circular shall enter into force as of the date of issuance. In case of any inconsistency between previous provisions and this Circular, this "Circular" shall prevail. The SAFE branches shall, upon receipt of this Circular, promptly forward it to the central sub-branches and sub-branches as well as the franchise institutions within their respective jurisdiction.

 

State Administration of Foreign Exchange

September 28, 2015





The English translation may only be used as a reference. In case a different interpretation of the translated information contained in this website arises, the original Chinese shall prevail.

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