Measures on the Administration of Reporting of Large Value and Suspicious Foreign Currency Cash Transactions (Chinese and English Text)

The following translation was retrieved from the People's Bank of China Web site on December 1, 2006. The Chinese text was retrieved from the People's Bank of China Web site on May 5, 2006.

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Administrative Rules for the Reporting by Financial Institutions of Large-Value and Suspicious Foreign Exchange Transactions Article 1 These Rules are formulated in accordance with Regulations of the People's Republic of China on Foreign Exchange Administration and other regulations in order to monitor large-value and suspicious foreign exchange transactions. Article 2 Financial institutions located in the territory of China that run foreign exchange business (hereinafter referred to as financial institutions) shall report, in accordance with these Rules, to foreign exchange administration authorities large-value and suspicious foreign exchange transactions. Large-value foreign exchange transaction refers to foreign exchange transactions above a specified amount made by transactions parties in any form of settlement through financial institutions. Suspicious foreign exchange transaction refers to foreign exchange transaction with abnormal amount, frequency, source, direction, use or any other such nature. Article 3 State Administration of Foreign Exchange and its branches (hereinafter referred to as SAFE) are responsible for supervising and administering the reporting of large-value and suspicious foreign exchange transactions. Article 4 When opening foreign exchange accounts for customers, financial institutions shall abide by Rules on Using Real Name for Opening Individual Deposit Account and Rules on Administration of Foreign Exchange Account within the Territory of People's Republic of China and shall not open anonymous foreign exchange accounts or accounts in obviously fictitious names for their customers. When processing foreign exchange transactions for customers, financial institutions shall verify information about the customer's real identity, including the name of work unit, name of the legal representative or person-in-charge, ID and its number, supporting documents for account opening, organization registration code, address, registered capital, business scope, size of business operation, average daily transaction volume of the account and in the case of an individual customer, name of the depositor, ID and its number, address, occupation, household income and other information about the customer's family. Article 5 Financial institutions shall record all large-value and suspicious foreign exchange fund transactions and keep the record for a minimum of five years as of the day of transaction. Article 6 Financial institutions shall establish and improve internal anti-money laundering post responsibility system, formulate internal anti-money laundering procedure and, have specified staff record, analyze and report large-value and suspicious foreign exchange transactions. Article 7 Financial institutions shall not disclose to any agency or individual information about large-value and suspicious foreign exchange transactions, unless otherwise provided for by laws. Article 8 The following foreign exchange transactions constitute large-value foreign exchange transactions: (1) Any single deposit, withdrawal, purchase or sale of foreign exchange cash above US$10,000 or its equivalent, or the accumulated amount of multiple deposit, withdrawal, purchase or sale transactions of foreign exchange within one day above US$10,000 or its equivalent; (2) Foreign exchange non-cash receipt and payment transactions made through transfer, bills, bank card, telephone-banking, internet banking or other electronic transactions or other new financial instruments in which a single transaction volume or accumulated transaction volume within one day exceeding US$100,000 or its equivalent by individual customers, and in the case of corporate customers, a single transaction volume or accumulated transaction volume within one day exceeding US$500,000 or its equivalent. Article 9 The following foreign exchange transactions constitute suspicious foreign exchange cash transactions: (1) Frequent deposit and/or withdrawal of large amount of foreign exchange cash from an individual bankcard or individual deposit account that are apparently not commensurate with the identity of or use of fund by the cardholder or account owner; (2) An individual resident transferring to or withdrawing cash in large amount in a foreign country after depositing large amount of foreign exchange cash in a bankcard in China; (3) Frequent depositing, withdrawal or sale of foreign exchange through an individual foreign exchange cash account below the SAFE validated threshold; (4) Non-resident individual requiring banks to open traveler's check or draft to convert large amount of foreign exchange cash he/she has brought into China in order to take the fund out of China; (5) Frequently depositing large amount of foreign exchange cash in a bankcard held by non-resident individual; (6) Frequent and large-amount fund movement through a corporate foreign exchange account not commensurate with the business activities of the account owner; (7) Regular and large-amount cash deposit into a corporate foreign exchange account without withdrawal of large amount of cash from the said account; (8) An enterprise frequently receiving export proceeds in cash that is apparently not commensurate with the range and size of its business; (9) The RMB fund that an enterprise uses to buy foreign exchange for overseas investment is mostly in cash or has been transferred from a bank account not belonging to the said enterprise; (10) The RMB fund that a foreign-funded enterprise uses to buy foreign exchange for repatriation of profit is mostly in cash or has been transferred from a bank account not belonging to the said enterprise; (11) A foreign-funded enterprise making investment in foreign exchange cash. Article 10 The following foreign exchange transactions constitute suspicious foreign exchange non-cash transactions: (1) Foreign exchange account of an individual resident frequently receiving fund from domestic accounts that are not under the same name; (2) An individual resident frequently receiving large amount of foreign exchange remittance from abroad before remitting the total amount out in the original denomination, or frequently remitting foreign exchange fund of the same denomination that is transferred from abroad in large amount; (3) Non-resident individual frequently receiving remittance in large amount from abroad, especially from countries (regions) with serious problems of narcotics production and trafficking; (4) Foreign exchange account of a resident or non-resident individual with a regular pattern of receiving large amount of fund which is withdrawn in several transactions the next day, and then receiving large amount of fund again which is withdrawn in several transactions the next day; (5) An enterprise making frequent and large advance payment for import and commission under trade account below the SAFE validated threshold through its foreign exchange account; (6) An enterprise frequently receiving, through its foreign exchange account, export payment in bills (such as check, draft and promissory note) in large amount; (7) Dormant foreign exchange accounts or foreign exchange accounts usually with no large fund movement suddenly receiving abnormal foreign exchange fund inflow, and the inflow gradually becoming larger in a short period of time; (8) An enterprise having frequent and large amount fund transactions through its foreign exchange account not commensurate with the nature and size of its business operation; (9) The foreign exchange account of an enterprise becoming inactive abruptly following frequent and large amount inflow and outflow of fund; (10) Frequent fund movement through the foreign exchange account of an enterprise in amounts divisible by thousand; (11) Rapid inflow and outflow of fund through the foreign exchange account of an enterprise, the amount of which is big within one day but the outstanding balance of the account is very small or nil; (12) The foreign exchange account of an enterprise remitting abroad the bulk of balance received in multiple small amount electronic transfers, check or draft deposits; (13) A domestic enterprise opening an offshore account in the name of an overseas legal person or natural person, and the said offshore account experiencing regular fund movement; (14) An enterprise remitting fund to many domestic residents through an offshore account and surrendering foreign exchange to banks in the name of donation, the transfer of fund and foreign exchange sales all done by one person or few persons; (15) The annual expatriation of profit by a foreign-funded enterprise exceeding the amount of originally invested equity by a large margin and obviously not commensurate with its business operation; (16) A foreign-funded enterprise rapidly moving the fund abroad in a short period of time after receiving the investment, which is not commensurate with the payment demand of its business operation; (17) Offsetting deposit and loan transactions with affiliates or connected companies of financial institutions located in regions with serious smuggling, drug trafficking or terrorist activities or other crimes; (18) Securities institutions ordering banks to transfer foreign exchange fund not for the purpose of securities dealing or settlement; (19) Securities institutions that engages in B share trading business frequently borrowing large amount of foreign exchange fund through banks; and (20) Insurance institutions frequently making compensation payment in large amount to or discharging insurance in large amount for the same overseas policy holder through banks. Article 11 Financial institutions shall report the large-value or suspicious foreign exchange fund transactions as defined by Articles 8, 9 and 10 monthly in hard copy as well as in electronic copy. Article 12 Financial institutions shall examine the following foreign exchange cash transactions and report promptly any discovery of suspected money laundering in hard copy with relevant documents attached. (1) Amount of expenditure of foreign exchange account roughly tallying with the amount of deposit in the previous day; (2) Depositing foreign exchange or renminbi cash in many transactions in the foreign exchange deposit accounts of other individuals and receiving at the same time renminbi or foreign exchange of equivalent amount; (3) An enterprise frequently purchasing foreign exchange with renminbi cash. Article 13 Financial institutions shall conduct verification over the following non-cash foreign exchange transactions, and shall promptly report any discovering of suspected money laundering activity and attach related files to the superior authorities: (1) An individual resident frequently switching from one denomination to another when conducting foreign exchange transactions apparently with no profit-seeking purpose; (2) An individual resident asking a bank to issue traveler's check or draft after frequently receiving foreign exchange remittance from abroad; (3) A non-resident individual frequently ordering traveler's check or cashing traveler's check or draft in large amount through foreign exchange account; (4) When opening foreign exchange account, an enterprise declining to provide supporting documents or general information on different occasions; (5) An enterprise group making internal foreign exchange fund transfer exceeding the volume of actual business operation; (6) An enterprise providing incomplete documents when surrendering to or purchasing foreign exchange from a bank, or the amount of buying or selling suddenly expanding, selling and buying becoming more frequent, or the amount of foreign exchange sold to the bank apparently exceeding the normal level of its business operation; (7) When entering an item of export revenue into an account in a bank, an enterprise failing to provide valid documents but frequently collecting foreign exchange sales statement (for verification purpose), or rejecting to provide valid documents but frequently collecting foreign exchange sales statement (for verification purpose); (8) An enterprise frequently receiving foreign exchange, making foreign exchange payment or frequently selling foreign exchange to banks, all in large amount, for the purpose of donation, advertising, sponsoring conference or exhibition, which is apparently not commensurate with its range of business; (9) An enterprise frequently receiving foreign exchange, making foreign exchange payment, or frequently selling foreign exchange to banks, all in large amount, for the purchase of buying or selling technology or trade mark right or other intangible assets, which is apparently not commensurate with its range of business; (10) Freight, premium and commission paid by an enterprise apparently not commensurate with its import and export trade; (11) An enterprise often depositing traveler's check or foreign exchange draft, especially those issued abroad and not commensurate with its business operation; (12) An enterprise suddenly paying its overdue foreign exchange loan in full with fund whose source is unspecified or not commensurate with the background of the said enterprise; (13) An enterprise applying for a loan guaranteed by assets or credit belonging to itself or a third party, the source of which is unspecified or not commensurate with the background of the customer; (14) Raising fund abroad through letter of credit with no foreign trade background or other means; (15) An enterprise knowingly conducting loss-making sales or purchase of foreign exchange; (16) An enterprise seeking to conduct a swap between the local currency and foreign currency for a fund whose source and use is unspecified; (17) The capital invested by the foreign partner of a foreign-funded enterprise exceeding the approved amount or direct external borrowing of a foreign-funded enterprise being remitted from a third country where there is no connected enterprise; (18) Local currency fund converted from capital invested by the foreign partner of a foreign-funded enterprise or external borrowing being diverted to bank accounts for securities and other investment, which is not commensurate with its business operation; (19) Fund movement in and out of the foreign exchange cash account of an financial institution apparently not commensurate with the size of the deposit in the account, or the fluctuation of fund movement apparently exceeding the change in the size of deposit; (20) Fund movement of the internal foreign exchange transaction accounts of a financial institution apparently not commensurate with its daily business operation; (21) Fund movement of the inter-bank foreign exchange transaction account, onshore and offshore business transaction account, or account for transactions with overseas affiliates apparently not commensurate with the daily business operation of the financial institution; (22) Foreign exchange credit or settlement between a financial institution and its connected enterprises fluctuating by a large margin within a short period of time; (23) A financial institution buying an insurance policy with large value foreign currency cash; and (24) Any foreign exchange fund transaction being suspected with proper reasons by the staff of a bank or other financial institutions as money laundering. Article 14 Tier-one branches located in provincial capital, capital of autonomous region and municipality directly under the central government of a financial institution shall act as the major reporting unit and the head office of the financial institution shall designate a major reporting unit if there is no such branch in these places. Sub-branches and offices of a financial institution shall report, within the first five work days of every month, large-value and suspicious foreign exchange fund transactions of the preceding month through their superior office to the major reporting unit and at the same time to the local branch office of SAFE. Each major reporting unit shall summarize large-value and suspicious foreign exchange fund transactions that take place in the province, autonomous region or municipality directly under central government in the preceding month and report, within the first 15 work days of every month, to the local branch office of SAFE. The head office of each financial institution shall report, within the first five days of every month, large-value and suspicious foreign exchange fund transactions that take place within the head office in the preceding month to the local branch office of SAFE. Article 15 When a financial institution discovers suspected crime during the examination and analysis of large-value and suspicious foreign exchange fund transactions, it shall report to the local public security authority and local SAFE office within three work days as of the day of discovery. Article 16 SAFE branch offices in every province, autonomous region, and municipality directly under the central government shall summarize large-value and suspicious foreign exchange fund transactions reported by financial institutes and report to SAFE head office within the first 20 work days of every month; when a foreign exchange transaction is suspected as crime, the case shall be transferred promptly to local public security authority and to the SAFE head office. Article 17 In the case of any of the following misconduct by a financial institution, the SAFE shall issue a warning, order the financial institution to take remedial action, and impose a fine between RMB10,000 yuan to RMB30,000 yuan. (1) Failing to report, according to relevant rules and regulations, large-value or suspicious foreign exchange fund transactions; (2) Failing to keep large-value or suspicious foreign exchange transactions in record as stipulated by relevant rules and regulations; (3) Disclosing large-value or suspicious foreign exchange fund transactions in violation of relevant rules and regulations; and (4) Opening foreign exchange account without examining account-opening document. Article 18 When a financial institution opens a foreign exchange account for an individual customer without examining account-opening documents, the SAFE shall issue a warning, order it to take remedial action and may impose a fine between RMB1,000 yuan and RMB5,000 yuan. Article 19 When a financial institution brings about grave loss as a result of its serious violation of these Rules, the SAFE may cease or revoke its approval for foreign exchange purchase and sales business in part or in full. Article 20 Disciplinary penalty shall be imposed on the staff of a financial institution who provides assistance to money-laundering activities; when the misconduct constitutes a violation of the criminal law, the case shall be transferred to judiciary authorities. Article 21 "Frequent" in these Rules means foreign exchange fund transactions occurring at least three times each day or occurring daily for at least five days in a row. "Large amount" in these Rules refers to amount close to the threshold amount for reporting as a large-value foreign exchange transaction. "A short period of time" in these Rules means within 10 business days. When "above", "between" and "up to" are used to indicate a threshold number, a floor or a ceiling, the number that ensues any of them is also included. Article 22 These Rules shall enter into effect as of March 1, 2003.