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SAFE News
  • Index number:
    000014453-2018-0019
  • Dispatch date:
    2018-05-04
  • Publish organization:
    State Administration of Foreign Exchange
  • Exchange Reference number:
  • Name:
    SAFE Announces Cases Involving Violations of Foreign Exchange Regulations
SAFE Announces Cases Involving Violations of Foreign Exchange Regulations

Since the beginning of 2018, the State Administration of Foreign Exchange (SAFE) has implemented the spirit of the 19 CPC National Congress and the arrangements of the CPC Central Committee and the State Council, with focus on serving the real economy, defending against financial risks and deepening financial reforms. The SAFE has tightened regulation of the foreign exchange market and investigated and dealt with illegal or irregular inflows and outflows of foreign exchange. It also has cracked down on false and fraudulent transactions to ensure the robust operation of the foreign exchange market and guard against and address financial risks. In accordance with the Regulation of the People's Republic of China on the Disclosure of Government Information (Decree No. 492 of the State Council), a selection of typical cases where foreign exchange regulations were violated are presented as follows:

Case 1: Evasion of foreign exchange by Tianjin Binhai Haitong Logistics Co., Ltd.

From January 2015 to January 2016, Tianjin Binhai Haitong Logistics Co., Ltd. fabricated the background of entrepot trade and paid foreign exchange of USD 46.518 million using the bills of lading already accomplished by other companies.

The company violated Article 12 and 14 of the Regulations on Foreign Exchange Administration and is considered getting involved in foreign exchange evasion, which has severely disturbed the order of the foreign exchange market. With a large amount of money involved, this is a serious case in nature. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 11.05 million.

Case 2: Evasion of foreign exchange by Xilong Scientific Co., Ltd.

From January 2015 to December 2016, Xilong Scientific Co., Ltd. in Shantou, Guangdong fabricated the background of entrepot trade and paid foreign exchange of USD 17.6102 million using the invalid bills of lading.

The company violated Article 12 and 14 of the Regulations on Foreign Exchange Administration and is considered getting involved in foreign exchange evasion, which has severely disturbed the order of the foreign exchange market. This is a serious case in nature. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 5.77 million.

Case 3: Evasion of foreign exchange by Chengdu Weiyi Trading Co., Ltd.

In June 2015, Chengdu Weiyi Trading Co., Ltd. fabricated the background of entrepot trade and paid foreign exchange of USD 4.2528 million using the false bill of lading.

The company violated Article 12 and 14 of the Regulations on Foreign Exchange Administration and is considered getting involved in foreign exchange evasion, which has severely disturbed the order of the foreign exchange market. This is a serious case in nature. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 1.3 million.

Case 4: Evasion of foreign exchange by Zhejiang Juxiong Import and Export Co., Ltd.

In February 2016, Zhejiang Juxiong Import and Export Co., Ltd. fabricated the background of entrepot trade and paid foreign exchange of USD 5.2476 million using the bills of lading already accomplished by other companies.

The company violated Article 12 and 14 of the Regulations on Foreign Exchange Administration and is considered getting involved in foreign exchange evasion, which has severely disturbed the order of the foreign exchange. This is a serious case in nature. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 1.3752 million.

Case 5: Evasion of foreign exchange by Guangxi Beitou ThangLong Import & Export Co., Ltd.

From December 2016 to February 2017, Guangxi Beitou ThangLong Import & Export Co., Ltd. fabricated the background of entrepot trade and paid foreign exchange of USD 13.3822 million using the false bills of lading.

The company violated Article 12 and 14 of the Regulations on Foreign Exchange Administration and is considered getting involved in foreign exchange evasion, which has severely disturbed the order of the foreign exchange market. This is a serious case in nature. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 4.5 million.

Case 6: Inward Remittances of Foreign Exchange by Tianjin Haohua Minsheng Technology Development Co., Ltd. against foreign exchange regulations

In June 2015, Tianjin Haohua Minsheng Technology Development Co., Ltd. fabricated the background of export and remitted USD 2 million under "advances from customers" into China, which is recognized as inward remittance in violation of the foreign exchange regulations.

The company violated Article 12 and 13 of the Regulations on Foreign Exchange Administration, and the company was fined RMB 200,000 in accordance with Article 41 thereof.

Case 7: Illegal foreign exchange settlement by Lianyungang Yunong Agricultural Technology Co., Ltd.

From July to September 2015, Lianyungang Yunong Agricultural Technology Co., Ltd. in Jiangsu handled procedure for inward remittance of capital and settled USD 4.89 million in foreign exchange using the false contract.

The company violated Article 23 of the Regulations on Foreign Exchange Administration and Article 9 of the Provisions on the Foreign Exchange Administration of Domestic Direct Investment from Foreign Investors and is considered getting involved in illegal foreign exchange settlement. In accordance with Article 41 of the Regulations on Foreign Exchange Administration, the company was fined RMB 980,000.

Case 8: Illegal foreign exchange settlement by Rugao Chengyang Agricultural Technology Co., Ltd.

On June 28, 2016, Rugao Chengyang Agricultural Technology Co., Ltd. in Jiangsu handled procedure for inward remittance of capital and settled USD 2.8 million in foreign exchange using the false contract.

The company violated Article 23 of the Regulations on Foreign Exchange Administration and Article 9 of the Provisions on the Foreign Exchange Administration of Domestic Direct Investment from Foreign Investors and is considered getting involved in illegal foreign exchange settlement. In accordance with Article 41 of the Regulations on Foreign Exchange Administration, the company was fined RMB 400,000.

Case 9: Illegal foreign exchange settlement by Xuzhou Haisheng Electronics Co., Ltd.

In December 2016, Xuzhou Haisheng Electronics Co., Ltd. handled procedure for inward remittance of capital and settled USD 9.9999 million in foreign exchange by fabricating the purposes of funds, and after settlement, the company used the funds for personal purposes other than its normal production and operations, which is considered illegal foreign exchange settlement.

The company violated Article 23 of the Regulations on Foreign Exchange Administration. In accordance with Article 41 of the Regulations on Foreign Exchange Administration, the company was fined RMB 1.234 million.

Case 10: Illegal foreign exchange settlement by Nantong Tongzhou District Shuoqing Machinery Co., Ltd.

From March to April 2017, Nantong Tongzhou District Shuoqing Machinery Co., Ltd. in Jiangsu handled procedure for inward remittance of capital and settled USD 8 million in foreign exchange using the false contract.

The company violated Article 23 of the Regulations on Foreign Exchange Administration and Article 9 of the Provisions on the Foreign Exchange Administration of Domestic Direct Investment from Foreign Investors and is considered getting involved in illegal foreign exchange settlement. In accordance with Article 41 of the Regulations on Foreign Exchange Administration, the company was fined RMB 1.1 million.

Case 11: Onshore guarantees by China Merchants Bank Quanzhou Branch for offshore loans against regulations

From October 2013 to October 2015, China Merchants Bank Quanzhou Branch didn't carry out a due diligence investigation as required, with regard to the purposes of the loans, expected sources of repayment, possibility of performing the contracts for onshore guarantees and relevant transaction background, when handling the execution and performance of the contracts for onshore guarantees for offshore loans.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the illegal gains of RMB 2.1319 million were confiscated and the bank was ordered to rectify within the prescribed time limit and fined RMB 5.8 million.

Case 12: Onshore guarantees by the Industrial and Commercial Bank of China TEDA Branch for offshore loans against regulations

From December 2013 to January 2016, the Industrial and Commercial Bank of China TEDA Branch handled the purchase and payment of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out a due diligence investigation as required, with regard to the purposes of the loans under guarantees, use of loans and relevant transaction background, although the messages on the use of loans were illegible, use of loans under guarantees was not specified in the letter of intent for loan extension, and the amount of funds for performance of the contracts was higher than that of loans.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the illegal gains of RMB 670,000 were confiscated and the bank was fined RMB 1.2 million.

Case 13: Onshore guarantees by Hana Bank (China) Company Limited Tianjin Branch for offshore loans against regulations

From August 2014 to August 2016, when handling the purchase and payment of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, Hana Bank (China) Company Limited Tianjin Branch didn't carry out a due diligence investigation as required, with regard to the qualifications of debtors, circulation of the ownership of goods during transactions and relevant transaction background.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the illegal gains of RMB 366,000 were confiscated, and the bank was fined RMB 2 million and suspended from handling foreign exchange settlement for and sales to enterprises for three months.

Case 14: Onshore guarantees by China Minsheng Bank Taiyuan Branch for offshore loans against regulations

From September 2014 to August 2015, when handling the purchase and payment of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, China Minsheng Bank Taiyuan Branch didn't carry out a due diligence investigation as required, with regard to the sources of repayment of debtors.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the illegal gains of RMB 2.07 million were confiscated, whilst the bank was ordered to rectify within the prescribed time limit and fined RMB 1.6 million.

Case 15: Onshore guarantees by the Agricultural Bank of China Xinxiang Branch for offshore loans against regulations

In December 2016, when handling the purchase and payment of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, the Agricultural Bank of China Xinxiang Branch didn't carry out a due diligence investigation as required, with regard to the purposes of funds under guarantees and relevant transaction background. Nor did it conduct continuous monitoring and tracking of the purposes of loans.

The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was ordered to rectify within the prescribed time limit and fined RMB 1 million, with the illegal gains of RMB 472,100 confiscated.

Case 16: Foreign exchange settlement for advances from customers by Harbin Bank Shenyang Branch against regulations

From May to July 2015, Harbin Bank Shenyang Branch settled foreign exchange for advances from customers under trade in goods without carrying out a due diligence investigation into corporate documents such as export contracts and invoices, and consistency between foreign exchange receipt and payment.

The bank violated Article 12 of the Regulations on Foreign Exchange Administration. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was ordered to rectify within the prescribed time limit and fined RMB 400,000.

Case 17: Foreign exchange receipts for individual trade handled by China Merchants Bank Jiangmen Branch against regulations

From November 2015 to May 2017, China Merchants Bank Jiangmen Branch handled foreign exchange receipts for cross-border trade through the individual foreign exchange savings account against regulations.

The bank violated Article 32 of the Measures for the Administration of Individual Foreign Exchange. In accordance with Article 48 of the Regulations on Foreign Exchange Administration, the bank was ordered to rectify within the prescribed time limit and fined RMB 160,000.

Case 18: Foreign exchange settlement for external debt by China Construction Bank Taian Branch against regulations

From February to May 2016, China Construction Bank Taian Branch settled foreign exchange for external debt of companies without reviewing and keeping the materials such as contracts and invoices that could prove the purposes of funds from settlement of foreign exchange of external debt and reviewing the consistency between the purposes of such funds and contract provisions.

The bank violated Article 15 of the Measures for the Registration and Management of External Debt and the provisions of "Materials for Bank Review" and "Review Elements" in Chapter VI of Operating Guidelines on External Debt Registration and Management. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was fined RMB 400,000.

Case 19: Foreign exchange settlement for trade in goods by the Industrial and Commercial Bank of China Binzhou Xincheng Sub-branch against regulations

From February to December 2016, the Industrial and Commercial Bank of China Binzhou Xincheng Sub-branch handled foreign exchange receipt and settlement in foreign currency banknotes for trade in goods without carrying out a due diligence investigation into the background where companies changed the way of foreign exchange receipt under trade and the necessity of receiving foreign exchange in foreign currency banknotes.

The bank violated Article 6, 9 and 10 of the Measures for Managing the Receipts and Payments of Foreign Currency Banknotes by Domestic Institutions. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was fined RMB 300,000.

Case 20: Entrepot trade handled by Ping An Bank Ningbo Branch against regulations

From June to December 2016, Ping An Bank Ningbo Branch handled foreign exchange payment for entrepot trade although the due diligence investigation into the authenticity of the entrepot trade was not carried out as required and the transaction documents for entrepot trade were not effective for picking up the goods.

The bank violated Article 12 of the Regulations on Foreign Exchange Administration. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was ordered to rectify within the prescribed time limit and fined RMB 800,000, with the illegal gains of RMB 506,200 confiscated.

Case 21: Mr. Zhang, native of Shanghai, evaded foreign exchange through split-up

In 2016, to transfer his assets overseas illegally, Mr. Zhang split up his personal funds, used the annual quotas of 27 individuals including his own to buy foreign exchange and transferred the foreign exchange into his overseas account. The funds thus transferred equaled USD 1.3419 million in total.

Zhang violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and is considered getting involved in the evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, Zhang was fined RMB 460,000.

Case 22: Illegal purchase and sales of foreign exchange by Mr. Chen, native of Shaanxi

From August to September 2016, to transfer his assets overseas illegally, Mr. Chen transferred RMB 26 million into the domestic account controlled by an underground bank, exchanged the money into foreign exchange and then transferred the foreign exchange into his Hong Kong account. The funds thus transferred equaled USD 3.8906 million in total.

Chen violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and is considered getting involved in the illegal purchase and sales of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, Chen was fined RMB 1.69 million.

Case 23: Mr. Tang, native of Jiangxi, evaded foreign exchange through split-up

From January to October 2016, to transfer his assets overseas illegally, Mr. Tang split up his personal funds, used the annual quotas of 69 individuals including his own to buy foreign exchange and transferred the foreign exchange into several overseas accounts. The funds thus transferred equaled USD 3.211 million in total.

Tang violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and is considered getting involved in the evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, Tang was fined RMB 1.5 million.

Case 24: Mr. Tu, native of Jiangsu, evaded foreign exchange through split-up

From January 2016 to April 2017, to transfer his assets overseas illegally, Mr. Tu split up his personal funds, used the annual quotas of 43 individuals in China including his own to buy foreign exchange and transferred the foreign exchange into his overseas account. The funds thus transferred equaled USD 2.1238 million in total.

Tu violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and is considered getting involved in the evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, Tu was fined RMB 724,500.



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