Laws of the People's Republic of China

State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange on Relevant Issues of the Standardized Administration of the Foreign Exchange Settlement Business of Individual Residents

HuiFa [2004] No. 18

March 18th, 2004

The branches and offices under the State Administration of Foreign Exchange in all provinces, autonomous regions and municipalities directly under the Central Government, the branches of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, all designated foreign exchange banks:

Some provisions of the administration of foreign exchange individual residents are properly adjusted with a view to strengthening and improving foreign exchange administration and promoting the international balance of payments. The guiding principles are to further promote trade and investment facilitation to ensure smooth proceeding of trade and investment activities which confirm to the provisions of the national laws and policies,, and at the same time, to manage the capital account effectively and prevent the speculative cross-boarder capital transaction to be completed through non-trading foreign exchanges channels of resident and non-resident individuals. Relevant issues of the administration of the foreign exchange settlement business of individual residents are notified as follows:

I.

The lawful foreign exchange income of individual residents may conduct foreign exchange settlement with banks according to relevant provisions. The banks shall examine strictly the authenticity of the foreign exchange settlement required by the individual residents.

II.

For the settlement of foreign exchanges with an equivalent amount of less than USD 10,000 (including USD 10,000) required by an individual resident at a time, real identity certificates should be presented. For the settlement of foreign exchanges with an equivalent amount of more than USD 10,000 but less than USD 50,000 (including USD 50,000) required by at a time, the bank shall examine the certificates of real identity and of the source of the lawful foreign exchanges according to Article 10 of the Interim Measures for the Administration of Foreign Exchanges of Domestic Individual Residents. For the settlement of foreign exchanges with an equivalent amount of more than USD 50,000, the individual resident shall apply to the local foreign exchange authority with the above-mentioned materials, and then go through formalities with the bank with the documents of approval issued by the local foreign exchange authority upon authenticity verification.

III.

After verification by the foreign exchange authority and settlement of foreign exchange for individual residents by the banks, duplicate copies of the certificate documents provided by the individual residents should be kept for 5 years for future reference.

IV.

Foreign exchange income from the trade account and capital account of individual residents shall be settled according to relevant provisions.

V.

In the business of foreign exchange settlement for individual residents, the banks shall strictly enforce the Measures for the Administration of the Reporting by Financial Institutions of Large Amount and Suspicious Foreign Exchange Capital Transactions (Decree No.3 (2003) of the People's Bank of China) and in a timely manner report large amount and suspicious foreign exchange capital transactions to the higher banks and foreign exchange authorities.

VI.

Local foreign exchange authorities shall strength the examination and supervision of the banks' business of foreign exchange settlement for individual residents on its conformity with the relevant provisions. Anyone with violation of provisions in this circular shall be punished by the foreign exchange authorities according to Regulations of the People's Republic of China on the Administration of Foreign Exchanges and other relevant stipulations.

VII.

This circular shall be put into implementation as of April 1st, 2004. In the case of any inconsistency between relevant stipulations and this circular, provisions in this circular shall prevail.

Upon receiving this circular, all foreign exchange authorities shall transmit it to the foreign exchange authorities, foreign invested banks and the city commercial banks under their respective jurisdiction as quickly as possible. Designated Chinese funded foreign exchange banks shall transmit it to their respective branches as soon as possible. Feedback can be made to the Department of Current Account Administration under the State administration of Foreign Exchange for any problems during implementation.