Laws of the People's Republic of China

the State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange on Issuing the Detailed Rules for the Implementation of the Measures for the Administration of Financial Institutions' Report of Large-Value and Suspicious Foreign Exchange Transactions

Huifa [2004] No. 100

Oct 12, 2004

The branches or foreign exchange management departments of the State Administration (hereafter referred to as "SAFE") of foreign exchange of all provinces, autonomous regions and municipalities directly under the Central Government, the SAFE's branches in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, the Industrial and Commercial Bank of China, the Agriculture Bank of China, the Bank of China, China Construction Bank, the Bank of Communications, China Development Bank, the Export-Import Bank of China, the Agricultural Development Bank of China, CITIC Industrial Bank, China Everbright Bank, Huaxia Bank, Guangdong Development Bank, Shenzhen Development Bank Co., Ltd., China Merchant Bank, Xingye Bank, Shanghai Pudong Development Bank, China Minsheng Banking Corp., Ltd. and China Zheshang Bank:

With the view of standardizing the reporting act of financial institutions of large-value and suspicious foreign exchange transactions, making better-defined the laws and regulations on and strengthening the work of anti-money laundering in the foreign exchange sector, the Detailed Rules for the Implementation of Measures for the Administration of Report of Financial Institutions of Large-value and Suspicious Foreign Exchange Transactions (hereinafter referred to as the "Detailed Rules for Implementation", for which see the Attachment), as formulated by the State Administration of Foreign Exchange according to the Law of the People's Republic of China on the People's Bank of China, Provisions Concerning the Anti-money Laundering Practices by Financial Institutions and the Measures for the Administration of Financial Institutions' Report of Large-Value and Suspicious Foreign Exchange Transactions, are hereby issued to you with the relevant matters clarified as follows:

Every financial institution shall, pursuant to the Measures for the Administration of Financial Institutions' Report of Large-Value and Suspicious Foreign Exchange Transactions, the Detailed Rules for Implementation and the plans and standards promulgated by SAFE for the collection of data relating to large-value and suspicious foreign exchange transactions, report to SAFE and its branch and sub-branch offices timely and accurately of the large-value and suspicious foreign exchange transactions and further improve the work of reporting large-value and suspicious foreign exchange transactions.

Every SAFE branch or sub-branch office shall strengthen their contact and communication with financial institutions and enhance their guidance in, supervision and control on the anti-money laundering work of financial institutions.

Upon receipt of this Circular, every SAFE branch (department of foreign exchange control) shall, promptly transmit it to the sub-branches and banks under its jurisdiction; the head office of every Chinese-funded foreign exchange bank shall promptly transmit it to its subordinate branches. Any problem arisen during the implementation of this Circular shall be promptly submitted to the inspection department of SAFE.

Contact person: Lu Zheng

Phone: 010-68402106

Detailed Rules for the Implementation of the Measures for the Administration of Financial Institutions' Report of Large-value and Suspicious Foreign Exchange Transactions

Chapter I General Provisions

Article 1

In order to standard the reporting by financial institutions of large-value and suspicious foreign exchange transactions, perfect the anti-money laundering work in the foreign exchange field, the Detailed Rules for Implementation are formulated according to the Law of the People's Republic of China on the People's Bank of China, the Provisions Concerning the Anti-money Laundering Practices by Financial Institutions and the Measures for the Administration of Financial Institutions' Report of Large-value and Suspicious Foreign Exchange Transactions (hereinafter referred to as the "Measures for Administration") .

Article 2

The SAFE and its branch and sub-branch offices (hereinafter referred to as the "AFE") shall be responsible for the inspection, supervision and administration of the implementation of the Measures for Administration by financial institutions, itemize, filtrate, identify and analyze information relating to large-value and suspicious foreign exchange transactions reported by financial institutions, make investigations and punishments on any act in violation of any provision concerning foreign exchange control by following the tracks of and verifying the information of suspicious foreign exchange transactions, hand over the information and clues of any suspected money laundering or any other crime to the authority for public security or other law enforcement organs, and keep away and crack down on money laundering and other illegal acts cooperating with other supervisory, law enforcement and judicial organs.

Article 3

Every financial institution shall strictly comply with the provisions concerning anti-money laundering and conscientiously perform its duty of anti-money laundering.

Every financial institution shall establish and perfect an internal anti-money laundering control system, set up a special operating department for anti-money laundering or designate an existing department to be responsible for the anti-money laundering work with appointment of a special person in charge.

Every financial institution shall follow out the principle of "having good knowledge of your customers", comply with the relevant provisions on using the real name for opening an individual deposit account and, when developing business relations with its customers and handling the foreign exchange business, get a good grasp of its customers' identities and daily operation conditions and other credit standing circumstances and identify its customers.

Every financial institution shall identify and verify the information related to large-value and suspicious foreign exchange transactions and promptly report it to the AFE.

Every financial institution shall keep for at least five years the records made during the performance of anti-money laundering.

Every financial institution shall abide by the secret-keeping system and may not disclose to any entity or individual any information of large-value or suspicious foreign exchange transaction or information of any of its customers enquired, verified or investigated, unless otherwise provided for by the state.

Every financial institution shall assist and cooperate with the AFE, other supervisory, law enforcement and judicial organs in anti-money laundering practices.

Chapter II Substance of and Standards for Reporting Large-value and Suspicious Foreign Exchange Transactions

Article 4

Every financial institution shall report the foreign exchange transactions prescribed in Article 8 of the Measures for Administration in both paper and electronic forms on a monthly basis.

Every financial institution shall report the foreign exchange transactions prescribed under Article 9 , Articles 10 (1), (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12), (19) and (20), Article 12 (3) and Articles 13 (3), (8), (9) and (23) of the Measures for Administration in both paper and electronic forms on a monthly basis.

Article 5

Every financial institution shall promptly report the foreign exchange transactions prescribed under Articles 10 (13), (14), (15), 16), (17) and (18), Articles 12 (1) and (2) and Articles 13 (1), (2), (4), (5), (6), (7), (10), (11), (12), (13), (14), (15), (16), (17), (18), (19), (20), (21), (22) and (24) of the Measures for Administration in paper form.

Article 6

Large-value and suspicious foreign exchange transactions, made through an account (or bankcard) opened in a domestic financial institution, shall be reported by the opening (issuing) bank; large-value and suspicious foreign exchange transactions, made through a bankcard issued abroad, shall be submitted by the acquiring bank; large-value and suspicious foreign exchange transactions, made in any way other than through a account (or bankcard), shall be reported by the operation-handling bank.

Article 7

When being reported of large-value and suspicious foreign exchange transactions, the accumulated amount of transactions prescribed in the present Measures shall be calculated unilaterally based on the receipt or payment of funds.

When being reported of large-value and suspicious foreign exchange transactions, in the case of fund moving between foreign exchange accounts, the relevant standards for non-cash transactions shall apply; and in the case of deposit or withdrawal of foreign exchange cash into or from an account or any other cash transactions, the relevant standards for cash transactions shall apply.

Article 8

A large-value foreign exchange transaction referred to in Article 8 of the Measures for Administration means:

(1)

any single or multiple foreign exchange cash transactions made in a day by an enterprise or individual with an amount or an accumulated amount of value equal to or more than of US$10,000;

(2)

any single or multiple non-cash foreign exchange transactions made in a day by an individual with an amount or an accumulated amount of value equal to or more than US$100,000; or

(3)

any single or multiple non-cash foreign exchange transactions made in a day by an enterprise with an amount or an accumulated amount of value equal to or more than US$500,000;

The large-value foreign exchange transactions, meeting any of the following requirements may not need to be reported:

(1)

upon the maturity of a time deposit, the principal or the principal together with all or part of the interest thereon is not directly withdrawn or transferred but re-deposited into another account of the customer under the same name in the same financial institution;

(2)

the principal or the principal together with all or part of the interest thereon in a current account is transferred to a time deposit in another account of the customer under the same name in the same financial institution;

(3)

the principal or the principal together with all or part of the interest thereon of a time deposit is transferred to a current account opened by the same customer under the same name in the same financial institution;

(4)

any large-value conversion from one to another foreign currency during an foreign exchange transaction by an individual with a firm offer;

(5)

any large-value foreign exchange transaction by any of the Party or state organs (including the state organs of power, administrative, judicial and military organs) at various levels, the Chinese People's Liberation Army and Armed Police Force, or the National Committee of the CPPCC or CPPCC local committees, not including any enterprise or institution subordinate to any of them;

(6)

any large-value foreign exchange transaction under a re-loaning of any international financial organization or foreign government loan;

(7)

any large-value debt swap transaction under a loan from any international financial organization or foreign government; and

(8)

other large-value foreign exchange transactions as may be provided by the SAFE.

Article 9

"In a large amount" as referred to in Articles 9, 10, 12 and 13 of the Measures for Administration means a single or multiple foreign exchange transactions with an amount or an accumulated amount of value not less than:

(1)

in the case of foreign exchange cash transactions, the equivalent of $8,000;

(2)

in the case of non-cash foreign exchange transactions by an individual, the equivalent of $80,000; or

(3)

in the case of non-cash foreign exchange transactions by an enterprise, the equivalent of $480,000.

Article 10

"Mostly" as referred to in Articles 9 (9) and (10) of the Measures for Administration means being at least 50%.

Article 11

"Large amount of Renminbi cash" as referred to in Article 12 (3) of the Measures for Administration means Renminbi cash in an amount of at least гд20,000.

Article 12

"The annual remit of profit by an enterprise with foreign investment exceeding the amount of investment by a large margin or obviously not in conformity with its business operation" as referred to in Article 10 (15) of the Measures for Administration means the case where the annual accumulated remit of profit by the foreign party of an enterprise with foreign investment exceeding the amount of investment already made by at least 50% or obviously not in line with its business operation.

Article 13

"Offsetting deposit or loan transaction with any affiliated or associated company of a financial institution located in a region with serious problems of smuggling, narcotics trafficking or terrorist activities" as referred to in Article 10 (17) of the Measures for Administration means any offsetting deposit or loan transaction between any financial institutions, enterprises or individuals and any affiliated or associated companies of a financial institution located in a region with serious problems of smuggling, narcotics trafficking or terrorist activities.

Article 14

"Disbursal from a foreign exchange account in an amount roughly equal to the amount of deposit made on the same or previous day" as referred to in Article 12 (1) of the Measures for Administration means the amount withdrawn, settled, remitted or transferred from a foreign exchange account roughly equal to the amount of cash deposit made on the same or previous day.

Article 15

"Any account holder depositing foreign exchange or Renminbi cash in many transactions in foreign currency savings accounts of others and receiving at the same time Renminbi or foreign exchange of the equivalent amount" as referred to in Article 12 (2) of the Measures for Administration means the case where the savings or balance accounts of both of the transacting parties respectively have a foreign exchange and Renminbi receipt, that is, when a party deposits foreign exchange in the savings or balance account of another person, he receives Renminbi in the equivalent amount through his savings or balance account, and vice versa.

Article 16

"Any enterprise group making any internal foreign exchange fund transfer exceeding the volume of its actual business operation" as referred to in Article 13 (5) of the Measures for Administration means any foreign exchange transaction that is not commensurate with the actual demand of business between enterprises within an enterprise group or between the enterprise group and associated companies.

Article 17

"Any enterprise knowingly conducting loss-making sale or purchase of foreign exchange" as referred to in Article 13 (15) of the Measures for Administration means the case where an enterprise knows that the existing condition is unfavorable for the transaction to be made but still makes purchase or sale of foreign exchange without sound reasons.

Article 18

"Any foreign exchange transaction being suspected on reasonable grounds by the staff of the bank or other financial institutions" as referred to in Article 13 (24) of the Measures for Administration means any cash or non-cash foreign exchange transaction as discovered and inferred to be likely related with any money laundering activity or other like crimes by a staff member of a financial institution with due care and prudence in identifying the transaction and customer when handling the financial business.

Chapter III Procedures for Financial Institutions' Report of Large-Value and Suspicious Foreign Exchange Transactions

Article 19

When reporting large-value and suspicious foreign exchange transactions, financial institutions shall accurately fill out the report forms in strict accordance with the format specified by SAFE and submit them to AFE after verification and auditing.

Article 20

As to the large-value foreign exchange transactions according with the first paragraph of Article 4 of the present Detailed Rules for Implementation, financial institutions shall fill out and submit a "Monthly Report Form of Large-Value Foreign Exchange Transactions by Enterprises" (hereinafter referred to as the "Form I") or a "Monthly Report Form of Large-Value Foreign Exchange Transactions by Resident and Non-Resident Individuals" (hereinafter referred to as the "Form II").

As to the suspicious foreign exchange transactions according with the second paragraph of Article 4 of the present Detailed Rules for Implementation, financial institutions shall fill out and submit a "Monthly Report Form of Suspicious Foreign Exchange Transactions" (hereinafter referred to as the "Form III") on the monthly basis.

As to the suspicious foreign exchange transactions according with Article 5 of the present Detailed Rules for Implementation, financial institutions shall promptly fill out and submit a "Report Form of Suspicious Foreign Exchange Transactions Identified by Financial Institutions" (hereinafter referred to as the "Form IV") or a (Report) Form for the Handing-over of Cases of (Clues to) Suspected Money Laundering Activities in the Foreign Exchange Field (See Attachment 1) with the relevant materials attached.

Article 21

Every branch office of financial institutions shall, within the first five working days of each month, itemize the information of large-value and suspicious foreign exchange transactions that have occurred in the preceding month by filling out Forms I, II and III, and submit these forms through its superior office to the principal reporting unit and to the local AFE in both paper and electronic forms.

The head office of every financial institution shall, within the first five working days of each month, itemize the information of large-value and suspicious foreign exchange transactions that have occurred within the head office in the preceding month by filling out Forms I, II and III and submit these forms to the local AFE in both paper and electronic forms.

Article 22

Every principal reporting unit shall, within the first 15 days of each month, itemize the information of large-value and suspicious foreign exchange transactions that have taken place in the head office in the preceding month by filling out Forms I, II and III and submit these forms to its head office and to the SAFE branch or the department for foreign exchange control of the province, autonomous region or municipality directly under the Central Government where it is located in both paper and electronic forms.

Article 23

The head office of every financial institution shall, within the first 20 days of each month, itemize the information of large-value and suspicious foreign exchange transactions that have taken place within its jurisdiction in the preceding month by filling out Forms I, II and III and submit these forms to the SAFE in electronic form.

Article 24

Every financial institution shall examine the suspicious foreign exchange transactions according with Article 5 of the present Detailed Rules for Implementation and, in the case of discovery of any suspected money laundering activity, fill out Form IV and submit it to the local AFE attached with the relevant materials within three working days from the discovery.

Article 25

Where any financial institution discovers a crime of (clue to) suspected money laundering, it shall, within three working days from the discovery, fill out a (Report) Form for the Handing over of Cases of (Clues to) Suspected Money Laundering Activities in the Foreign Exchange Field and hand it over to the public security department attached with the relevant materials and submit a copy of the Form to the local AFE.

Article 26

Financial institutions may computerize the collection of reporting data concerning large-value foreign exchange transactions and suspicious foreign exchange transactions that can be quantitatively described, provided that:

(1)

the integrity, standardization and reality of the information be ensured;

(2)

the data originate from the accounting data and other core business data in the original database of the financial institution; and

(3)

the quantification indicators and interface specification as issued by the SAFE be abided by.

Chapter IV The Gathering, Filtering, Identification, Analysis, Investigation, Verification and Treatment by the AFE of Reporting Data Concerning Large-Value and Suspicious Foreign Exchange Transactions

Article 27

The AFE shall, pursuant to the specified procedure, examine the standardization of the reporting forms submitted by financial institutions, and if any reporting form fails to meet the requirement for standardization, charge the financial institution concerned to promptly fill out and submit another proper reporting form.

The branch or the foreign exchange control department of SAFE of every province, autonomous region or municipality directly under the Central Government shall respectively itemize Forms I, II and III that meet the requirement for standardization and submit the itemized materials to the SAFE before the 20th every month.

After receiving Forms IV and (Report) Forms for the Handing-over of Cases of (Clues to) Suspected Money Laundering Activities in the Foreign Exchange Field as submitted by financial institutions, every SAFE sub-branch shall submit them through its superior office to the SAFE branch or foreign exchange control department of the province, autonomous region or municipality directly under the Central Government which shall make a prompt itemization and submit the itemized materials to the SAFE.

Article 28

The AFE shall promptly input into its database and itemize, filter, identify, analyze and verify the electronic data that meets the requirement for standardization and submit analysis reports (monthly and quarterly) to its superior office based on the relevant provisions.

Article 29

Where the superior office of an AFE hands over any information on suspicious foreign exchange transactions for verification to the inferior office, the superior office shall fill out a Sheet for the Handing-over of Information on Large-value and Suspicious Foreign Exchange Transactions Involved in Cases (See Attachment 2). The inferior office shall promptly make such verification and report the verification and treatment result to the superior office within a specified time limit.

Article 30

Where any assistance of another SAFE branch or sub-branch is required for verification of the information on foreign exchange transactions, the requesting branch or sub-branch shall fill out a Letter Requesting Assistance for Verification of Large-value and Suspicious Foreign Exchange Transactions (See Attachment 3), and the requested branch or sub-branch shall promptly make such verification and notify the requesting branch or sub-branch of the result of the verification.

Article 31

Where any assistance of a financial institution is required for verification of the information on foreign exchange transactions, the requesting AFE shall fill out a Notice of Out-of-spot Verification of Large-value and Suspicious Foreign Exchange Transactions (See Attachment 4). The requested financial institution shall provide such assistance as requested and notify the requesting AFE of the verification result.

Article 32

In cast the AFE discovers any suspected crime of (clue to) money laundering, it shall hand over the case or clue to the public security department according to the Provisions Concerning the Cooperation Between the Public Security Department and the State Administration of Foreign Exchange in Anti-money Laundering Practices in the Foreign Exchange Field; in the case of discovery of any other suspected offence (clue), it shall hand the case (clue) over to the relevant law enforcement organ according to the Operating Rules for Handing over Cases.

Article 33

The AFE shall severely deal with, according to law, suspected violations of the provisions on foreign exchange control discovered during the verification.

The SAFE branch or foreign exchange control department of every province, autonomous region or municipality directly under the Central Government shall, on a monthly basis, submit to the SAFE a report on the following work conducted by itself and the SAFEs subordinate to it by making use of the reporting information of large-value and suspicious foreign exchange transactions:

(1)

discovering clues to suspected crimes and handing over the cases to the public security department;

(2)

providing assistance to the judicial and other law enforcement organs;

(3)

discovering and dealing with suspected violations of the provisions on the foreign exchange control.

Chapter V Legal Responsibility

Article 34

Where any financial institution fails to report any large-value or suspicious foreign exchange transaction or fails to do so timely , it shall be given a warning and a fine of 50,000 up to 300,000 yuan by the AFE pursuant to Article 25 of the Measures for Punishment of Illegal Financial Activities.

Article 35

Where any financial institution opens an foreign exchange account for an enterprise without examining the customer information or without requiring all of the necessary customer information according to the relevant provisions, it shall be charged to make corrections and cancel the foreign exchange account, condemned publicly and given a fine of 50,000 up to 300,000 yuan by the AFE pursuant to Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Control.

Article 36

Where any financial institution is involved in any of the following circumstances, it shall be charged to make corrections, condemned publicly and given a fine of 50,000 up to 300,000 yuan by the AFE pursuant to Article 49 of the Regulations of the People's Republic of China on Foreign Exchange Control:

(1)

failing to provide assistance to the AFE by making out-of-spot verification of anti-money laundering information;

(2)

failing to provide assistance to the AFE by making spot verification of anti-money laundering information;

(3)

failing to establish an internal anti-money laundering control system according to relevant provisions; and

(4)

failing to be cooperative in the inspection and supervision by the AFE over the anti-laundering work.

Article 37

Where any financial institution is involved in any of the following circumstances, it shall be charged to make corrections and given a warning and may be given a fine of 10,000 up to 30,000 yuan pursuant to Article 17 of the Measures:

(1)

failing to submit integrated report of large-value and suspicious foreign exchange transactions according to the relevant provisions;

(2)

failing to accurately report information of large-value and suspicious foreign exchange transactions according to the relevant provisions;

(3)

failing to keep records of large-value and suspicious foreign exchange transactions and the relevant materials according to the relevant provisions; and

(4)

violating the relevant provisions by disclosing the information of any large-value and suspicious foreign exchange transactions or of any of its customers being enquired, verified or investigated.

Article 38

Where any financial institution opens a foreign exchange account for any individual without examining the customer information or without requiring all of the necessary customer information according to the relevant provisions, it shall be charged to make corrections and given a warning and may be given a fine of 1,000 up to 5,000 yuan by the AFE pursuant to Article 18 of the Measures for Administration.

Article 39

Where any financial institution violates any of the anti-money laundering provisions when handling foreign exchange business and causes heavy losses as a result, the AFE shall suspend or cease part or all of its foreign exchange settlement and sales business pursuant to Article 19 of the Measures for Administration, and may suggest other financial supervisory authorities to suspend or cease other foreign exchange business of the financial institution.

Article 40

Where any staff member of a financial institution violates the relevant provisions and provides assistance in money-laundering activities, he shall be given a disciplinary punishment in accordance with Article 20 of the Measures for Administration; if a crime is constituted, he shall be transferred to the judicial organ to be investigated for criminal responsibility.

Chapter VI Supplementary Provisions

Article 41

The "Principal reporting unit" means tier-one branches located in capitals of provinces and autonomous regions and in municipalities directly under the Central Government of a financial institution, or special offices designated by a financial institution to collect, itemize and report to the SAFE branch or foreign exchange control department of the province, autonomous region or municipality directly under the Central Government large-value and suspicious foreign exchange transactions that have taken place in all branch and sub-branch offices in such region.

Article 42

The provisions of the Measures for Administration and the present Detailed Rules for Implementation concerning the reporting of large-value and suspicious foreign exchange transactions by enterprises shall be applicable to the reporting of large-value and suspicious foreign exchange transactions by any domestic institution such as a state organ, social organization or army unit, any overseas institution that opens an account within a domestic financial institution and makes exchange, receives and pays foreign exchange through such account, and any overseas institution that handles foreign exchange business through a domestic financial institution without having an account therewith.

Article 43

The power to interpret the present Detailed Rules for Implementation shall remain with the SAFE.

Article 44

The present Detailed Rules for Implementation shall come into force as of the date of promulgation.

Attachment 1 (Report) Form for the Handing-over of Cases of (Clues to) Suspected Money Laundering Activities in the Foreign Exchange Field (omitted)

Attachment 2 Sheet for the Handing-over of Information on Large-value and Suspicious Foreign Exchange Transactions Involved in Cases (omitted)

Attachment 3 Letter Requesting Assistance for Verification of Large-value and Suspicious Foreign Exchange Transactions (omitted)

Attachment 4 Notice of Out-of-spot Verification of Large-value and Suspicious Foreign Exchange Transactions (omitted)