Circular of the State Administration of Foreign Exchange on Issues Concerning Administration of Overseas Organizations’ Foreign Exchange Accounts in China

Hui Zong Fa [2009] No. 29

Branches and foreign exchange administrative divisions of the State Administration of Foreign Exchange (SAFE) in provinces, autonomous regions and municipalities directly under the central government, branches of the SAFE in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, and designated Chinese-invested foreign exchange banks,

For the purpose of regulating the opening and use of foreign exchange accounts in China by overseas organizations, facilitating investment in trade and preventing financial risks, according to the provisions of the Foreign Exchange Control Regulations of the People’s Republic of China, the relevant issues are hereby notified as follows:

Article 1 The “overseas organizations” herein refer to the organizations duly formed and registered in overseas regions (including Hong Kong, Macao and Taiwan). The “domestic banks” herein refer to the Chinese and foreign-invested banks that are qualified for operating businesses of taking deposits from the public and handling domestic and overseas settlement according to law.

  The “overseas organizations’ foreign exchange accounts in China” herein exclude overseas organizations’ offshore accounts in China (accounts of overseas organizations opened with the offshore business departments of domestic banks that have the qualification for operating offshore banking businesses according to law).

Article 2 Overseas organizations and domestic banks shall comply with the provisions herein and other relevant laws and regulations of the state when opening and using foreign exchange accounts and handling foreign exchange receipt and disbursement businesses.

Article 3 A domestic bank shall review the account-opening materials of an overseas organization including documents proving its legal establishment and registration overseas when opening a foreign exchange account for it. Chinese versions of the account-opening materials including certificates shall be provided if such materials are prepared in foreign language. Except as otherwise provided by the SAFE, no approval form the SAFE and its branches (hereinafter referred to as foreign exchange authorities) is required for such opening.

  The name of the foreign exchange account of an overseas organization in China shall be consistent with the name (or its corresponding Chinese name) on the documents proving its legal registration in overseas regions.

Article 4 When opening a foreign exchange account for an overseas organization, a domestic bank shall make the mark of NRA (NON-RESIDENT ACCOUNT), namely NRA + foreign exchange account No., on the front of the foreign exchange account in a unified way and identify whether the overseas organization is a banking organization or a non-banking organization, so as to enable the parties and banks in China that have capital business with the foreign exchange account to accurately determine such foreign exchange account is an overseas organization’s foreign exchange account in China.

  Within 18 months since the promulgation of this Circular, domestic banks shall finish their works on adjustment of their internal systems for marking overseas organizations’ foreign exchange accounts in a unified way as prescribed in the previous paragraph and marking of NRA on the overseas organizations’ foreign exchange accounts established before the promulgation of this Circular.

  Domestic banks shall, in accordance with the Circular of the State Administration of Foreign Exchange and the General Administration of Quality Supervision, Inspection and Quarantine on Distribution of the Operating Rules for Code Marking for Special Organizations in Statistics and Declaration of International Payment (Hui Fa [2003] No.131), apply for a special organizational code for the overseas organization that applies for opening a foreign exchange account, go through procedures of registration of the basic information of the overseas organization with the foreign exchange authorities, and submit the information of the overseas organization concerning opening of a foreign exchange account, balances and details of receipt and payment to the foreign exchange authorities through the foreign exchange account administration system. Such provisions are inapplicable to the foreign exchange accounts of overseas banks in domestic banks including banker's deposit accounts.

Article 5 The foreign exchange receipt and payment between accounts of domestic organizations and individuals and overseas organizations’ foreign exchange accounts in China shall be subject to the administration of cross-border transaction. Domestic banks shall, in accordance with the provisions on administration of foreign exchange for cross-border transaction, handle business after examining the valid business papers and vouches of domestic organizations and individuals.

  Before a domestic bank finish its works on marking of NRA, if there is a payment to a domestic organization or individual through an overseas organization’s foreign exchange account in China, the bank that pays the capital shall indicate NRA PAYMENT on P.S. of payment instructions to tell the bank that receives such payment the capital is from an overseas organization’s foreign exchange account. Where any domestic organization or individual makes any payment to an overseas organization’s foreign exchange account in China, it/he shall provide the bank that handles payment materials that can prove the type of the foreign exchange account for receiving foreign exchange, besides valid business papers and vouches as prescribed. If the bank that makes such payment unable to identify the type of the foreign exchange account for receiving such payment due to reasons of the materials used to proving the type of the foreign exchange account, it shall consult the bank that receives such payment about the type of the account and the latter shall give a written reply.

Article 6 Where there is any foreign exchange collection from home and abroad incurred in an overseas organization’s foreign exchange account in China, any transfer of foreign exchange between such accounts and any transfer or payment of foreign exchange between or from such account and/to an offshore account, a domestic bank may handle its business directly according to the instruments of its customer, except as otherwise provided by the SAFE.

Article 7 Any capital transaction between an overseas organization’s foreign exchange account in China and any account in home and abroad as well as changes of balances incurred shall be went through procedures of statistics and declaration for international payment according to the relevant provisions.

Article 8 Without approval of the branches or administrative divisions of the SAFE in the place where it is registered, an overseas organization shall neither make deposit and withdraw foreign currencies in/from its foreign exchange account in China, nor make any settlement in such foreign exchange account directly or in disguised form.

Article 9 The balance of capitals in an overseas organization’s foreign exchange account in China, except as otherwise provided by the SAFE, shall be subject to the short-term foreign loan management of domestic banks. If such balance is used as pledge of a domestic organization for loan from a domestic bank, it shall be subject to the foreign exchange control for overseas guarantee for domestic loan.

Article 10 A domestic bank shall comply with the provisions of laws, administrative regulations and departmental rules on reports for any large scale or doubtable transaction for the purpose of anti-money laundering when handling businesses concerning overseas organizations’ foreign exchange accounts in China.

Article 11 The opening of an offshore account by any overseas organization or individual with the offshore business department of a domestic bank that has the qualification for operating offshore banking business according to law and any foreign exchange transaction between such offshore account and any domestic account shall be subject to the provisions of the Measures for Administration of Offshore Banking Businesses (Yin Fa [1997] No. 438) and its detailed rules for implementation.

Article 12 The opening, use and close of a foreign exchange account of a QFII, a special foreign exchange account of a foreign investor, a foreign exchange account of foreign institutions for B-share market and a foreign exchange account of a foreign embassy or consulate or a representative office of any international organization with diplomatic immunity in China shall be subject to the provisions of the SAFE, if there is any, otherwise, to the provisions herein, including marking of NRA.

Article 13 Where any organization violates provisions herein, the SAFE shall give it certain punishments according the Foreign Exchange Control Regulations of the People’s Republic of China and other relevant provisions on foreign exchange control.

Article 14 The Circular shall enter into force on Aug. 1, 2009, except the provisions on submission of the information concerning opening of overseas organizations’ foreign exchange accounts in China as well as balances and details of the accounts to the SAFE through the foreign exchange account administration system, the implementation time for which will be notified separately by the SAFE.

  This Circular shall be subject to the interpretation of the SAFE.

  Branches and foreign exchange administrative divisions shall forward the Circular to the central sub-branches, branches and designated foreign exchange banks within their jurisdictions as soon as possible after receiving this Circular. For any issues incurred in implementation, please send the feedbacks to the Comprehensive Department of the SAFE.