Laws of the People's Republic of China

The State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange (SAFE) on the Adjustment of Relevant Policies on Foreign Currency and Clarification of Related Operational Issues

HuiFa [2002] No.20

February 10, 2002

SAFE branches in all provinces, autonomous regions, and municipalities directly under the central government, exchange administration offices, SAFE branches in the cities of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, and all designated Chinese-funded foreign exchange banks:

After the issuance of the Circular of the PBC on Issues Related to the Administration of Foreign Currency (YinFa [2001] No.376) and the Supplementary Circular of the PBC on Issues Related to the Administration of Foreign Currency (YinFa [2001] No.384), some SAFE branches and sub-branches (hereinafter referred to as SAFE offices) and banks have inquired of the SAFE some operational questions therein mentioned. To help SAFE offices and banks better implement the policies, a circular on related issues is given hereunder:

1.

Adjustment of the spread of currency in HK dollar

As of March 1,2002, the spread between the bid rate of currency in HK dollar and the bid/ask average rate of exchange in HK dollar shall not exceed 1 percent. The ask rate of currency in HK dollar shall be equal to the ask rate of exchange in HK dollar. The spread of exchange in HK dollar remains as originally stipulated. Current policies on the spread of currency and exchange rate in other currencies remain unchanged.

2.

Attribution and administration of individual foreign exchange sale

Individual sale of foreign currency is currency exchange in nature. In accordance with China's current system, it belongs to the business category of foreign exchange purchases and sales and shall be supervised as such by SAFE offices. The administration of market access by business outlets under banks' sub-branches for the business of foreign exchange purchases from individuals shall follow the Supplementary Circular of the PBC on Issues Related to the Administration of Foreign Currency (YinFa [2001] No.384).

3.

Domestic fund transfers between domestic foreign currency account of a resident individual and that of his/her lineal kin.

Lineal kinship mentioned in foreign exchange regulations refers to the spouse or parent/child relationship between the transferor and transferee. When making individual foreign currency transfer domestically, the transferor shall present the following documents to the bank: (1) Household register in case the transferor and the transferee belong to the same household. (2) Notarial document issued by a notary office verifying that the transferee is a lineal kin of the transferor in case they do not belong to the same household.

When a domestic fund transfer is made between the foreign exchange account of a resident individual and that of his/her lineal kin, the bank shall guarantee that the transfer is made between accounts of the same nature, i.e., from resident account to resident account, from currency account to currency account, from foreign exchange account to foreign exchange account. Transfers between accounts of different nature are prohibited.

4.

Reporting the domestic transfer of foreign currency by a resident individual over the equivalent of US$10,000 for record

A bank and its subsidiaries shall report any single domestic transfer over the equivalent of US$10,000 (US$10,000 included) to a relevant SAFE office on a monthly basis. Such report shall be incorporated into the current "Itemized Report of Large-sum (more than the equivalent of US$10,000) Deposits and Withdrawals of Resident and Nonresident Individuals". The reporting channel and means shall be in line with the Circular on Issues Related to Large-sum Foreign Currency Deposits and Withdrawals of Resident and Nonresident Individuals ([97] HuiGuanHanZi No.123) (for details see attachment 1). The revised form of "Itemized Report of Large-sum (more than the equivalent of US$10,000) Foreign Currency Deposits, Withdrawals, and Domestic Transfer of Resident and Nonresident Individuals" is herewith enclosed (see attachment 2).

Upon receiving the circular, all SAFE branches shall transmit it to the sub-branches under their jurisdiction, local foreign-funded banks and cooperative banks as quickly as possible. Headquarters of all designated Chinese-funded foreign exchange banks shall immediately transmit the circular to their branches and sub-branches.

Enclosures:

1. Circular on Issues Related to Large-sum Foreign Currency Deposits and Withdrawals of Resident and Non-resident Individuals [97] HuiGuanHanZi No. 123

2. Itemized Report of Large-sum (more than the equivalent of US$10,000) Foreign Currency Deposits, Withdrawals, and Domestic Transfer of Resident and Non-resident Individuals (Omitted)

Attachment:Circular on Issues Related to Large-sum Foreign Currency Deposits and Withdrawals of Resident and Nonresident Individuals

HuiGuanHanZi[1997] No.123

April 14, 1997

SAFE branches in all provinces, autonomous regions and municipalities directly under the Central Government, SAFE branch in Shenzhen Special Economic Zone; Industrial and Commerce Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, China Investment Bank, Bank of Communications, CITIC Industrial Bank, China Everbright Bank, Fujian Industrial Bank, China Merchants Bank, Guangdong Development Bank, Shenzhen Development Bank Co. Ltd., Huaxia Bank, Shanghai Pudong Development Bank, Hainan Development Bank, China Minsheng Banking Corp. Ltd., State Development Bank, Import-Export Bank of China:

With the deregulation of use of foreign exchange for private purposes, some resident and nonresident individuals have been found to deposit or withdraw large sums of foreign currency recently. Some individual deposits or withdrawals amount to hundreds of thousands of US dollars, or even to over one million US dollars in one or two cases. In order to improve supervision and administration of foreign exchange under current account, and safeguard legal foreign exchange receipts and payments of resident and non-resident individuals, all banks shall abide by the following rules when handling large-sum individual deposits and withdrawals of foreign currency:

1.

For a deposit or withdrawal of foreign currency more than the equivalent of US$10,000 (inclusive), the designated foreign exchange bank shall require the depositor or the with-drawer to present authentic ID certificate (ID card or passport), check it and then have it recorded. The bank shall do so in a case by case manner.

2.

Branches and sub-branches of all designated foreign exchange banks shall register the number and amounts of large-sum deposits and withdrawals of foreign currency over the equivalent of US$10,000 for the previous month, fill the Registration Form of Large-sum (more than the equivalent of US$10,000) Deposits and Withdrawals of Foreign Currency by Resident and Nonresident Individuals (hereinafter the Registration Form), and submit the Registration Form to the relevant local SAFE office within the first ten days of each months. The SAFE office shall fill "Itemized Report of Large-sum (more than the equivalent of US$10,000) Deposits and Withdrawals of Foreign Currency by Resident and Non-resident Individuals" and submit it to the SAFE. Headquarters of the designated foreign exchange banks located in Beijing shall fill the Registration Form and submit it directly to the Supervision and Inspection Department of the SAFE within the first ten days of each month.