Laws of the People's Republic of China

    Article 1  These Measures are enacted for the purpose of punishing illegal banking activities, maintaining banking order, and preventing banking risks.

    Article 2  If a banking institution violates the provisions on banking control of the State, and the relevant laws and administrative regulations contain penal provisions, the banking institution shall be punished according to the said provisions; if the relevant laws and administrative regulations do not contain penal provisions, the banking institution shall be punished according to these Measures.

    The term "banking institution" in these Measures means the financial institutions that are legally established and engaged in banking business within the territory of the People's Republic of China, and includes banks, credit cooperatives, finance companies, trust and investment companies, lease financing companies, etc.

    Article 3  Administrative sanctions stipulated in these Measure shall be decided by the People's Bank of China; however, the administrative sanctions stipulated in Article 24 and Article 25 of these Measures shall be decided by the foreign exchange control department of the State.

    Disciplinary sanctions stipulated in these Measures, including warning, recording of a demerit, recording of a major demerit, demotion, removal from post, placement on probation and dismissal, shall be decided by the employing banking institution or the banking institution at a higher level.

    Any employee of a banking institution who has been subjected to the disciplinary sanction of dismissal according to these Measures shall not work in any banking institution again, and the People's Bank of China shall notify all banking institution that he or she may not be employed and publish an announcement to that effect in national newspapers. With respect to a senior management employee of a banking institution who has been subjected to the disciplinary sanction of removal from his or her post in accordance with these Measures, the people's bank of China shall decide that he or she may not, for a set period of time or ever again, hold senior management post or a post equivalent to his or her former post in any banking institution, and it shall notify all banking institution that he or she may not be employed and publish an announcement to that effect in national newspapers.  

    The term "senior management employees" in these Measures means legal representatives of banking institutions and other principal persons in charge, including the chairmen of the board of directors, vice chairmen of the board of directors, bank managers, deputy bank managers, heads and deputy heads of banks and their branches;

    The chairmen of administrative board, vice chairmen of administrative board, heads and deputy heads of credit cooperatives; and the chairmen of the board of directors, vice-chairmen of the board of directors, general managers, deputy general managers, etc. of banking institutions such as finance companies, trust and investment companies, lease financing companies, etc.

    Article 4  Any employee of a banking institution who, after leaving a banking institution, is found to have violated the provisions on banking control of the State during the period of working in the banking institution, shall be investigated for liability according to law.

    Article 5  The establishment, merger or closure of branches or representative offices by banking institutions shall be subject to the approval of the People's Bank of China.

    A banking institution that establishes, mergers or closes a branch or representative office without the approval of the People's Bank of China shall be given a warning, and fined not less than 300,000 yuan but not more than 50,000 yuan; the senior management employees directly responsible of the said banking institution shall be given a disciplinary sanction ranging from removal from their posts to dismissal.

    Article 6  With respect to any one of the following circumstances, a banking institution shall apply to the People's Bank of China for approval:

    (1) makes a change to its name;

    (2) makes a change to its registered capital;

    (3) makes a change to its location;

    (4) makes a change in its senior management employees; or

    (5) makes other changes stipulated by the People's Bank of China.

    If a banking institution under any one of the circumstances mentioned in the preceding paragraph does not apply to the People's Bank of China for approval, the institution shall be given a warning and fined not less than 10,000 yuan but not more than 100,000 yuan; under the circumstances prescribed in the fourth item of the preceding paragraph, the senior management employees of the banking institution who are directly responsible shall be given disciplinary sanctions ranging from removal from their posts to dismissal.

    Article 7  Any banking institution that alters shareholders, transfers stock ownership or adjusts stock structure shall apply to the People's Bank of China for approval; a banking institution that involves a change in State-owned stock shall apply to finance departments for approval according to relevant provisions.

    Any banking institution that alters shareholders, transfers stock ownership, or adjusts stock structure without legal approval shall be given a warning, have illegal income confiscated, and have a fine of not less than one time but not more than three times illegal income imposed, or have a fine of not less than 50,000 yuan but not more than 300,000 yuan imposed if there is no illegal income; the senior management employees of the banking institution who are directly responsible shall be given disciplinary sanctions ranging from removal from their posts to dismissal.

    Article 8  Banking institution may not make sham capital contributions or surreptitiously withdraw contributed capital.

    A banking institution making a sham capital contribution or surreptitiously withdrawing its capital contributions shall be ordered to suspend businesses and carry out rectification and fined not less than five percent but not more than ten percent of the amount of the sham capital contribution or the surreptitiously withdrawn capital contribution. The banking institution's senior management employees directly responsible shall be subjected to the disciplinary sanction of dismissal, and the other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a demerit to dismissal. If the case is serious, the banking institution's permit to conduct banking businesses shall be revoked. If the criminal offence of making sham capital contributions, surreptitiously withdrawing capital contributions or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 9  Banking institution may not engage in financial business activities out of the business scope approved by the People's Bank of China.

    If a banking institution, in engaging in financial business activities, exceeds the business scope approved by the People's Bank of China, it shall be given a warning, and its illegal income shall be confiscated; in addition, it shall be imposed a fine of not less than 1 time and not more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,000 yuan; The senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; and the other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a demerit to dismissal; if the circumstances are serious, the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct banking businesses shall be revoked; if the criminal offence of illegal operation or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 10  Representative offices of banking institutions may not engage in banking businesses.

    If a representative office of a banking institution engages in banking business, it shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,000 yuan. The senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal, and the other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from demotion to being dismissal; if the circumstances are serious, the representative office shall be closed.

    Article 11  Banking institutions may not engage in off-the-books businesses in any of the following forms:

    (1) in carrying out business such as deposit or lending business, failing to book or register the same in accordance with the accounting system, or failing to reflect the same in its accounting statements;

    (2) handling different types of business such as deposits, and lending by setting off the same against each other in one account;

    (3) failing to book operating revenue; or

    (4) other off-the-book businesses.

    If a banking institution violates the provisions of the preceding paragraph , it shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subject to a fine of not less than 1 time but not more than 5 times the illegal income or, if there is no illegal income, a fine not less than 100,000 yuan but not more than 500,000 yuan. The senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to the disciplinary sanction of dismissal. If the circumstances are serious, the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct banking businesses shall be revoked. If the criminal offence of illegally making inter-banking-institution loans or other loans with off-the-books customer funds or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 12  Banking institutions may not submit financial and accounting reports or statistical reports which are a sham or which conceal major facts.

    A banking institution that submits a financial or accounting reports or a statistical report which is a sham or which conceals major facts shall be given a warning, and subjected to a fine of not less than 100,000 yuan but not more than 500,000 yuan; the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal, and the other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a major demerit to dismissal; if the circumstances are serious, the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct banking businesses shall be revoked; if the criminal offence of submitting a sham financial or accounting report or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 13  Banking institution may not issue financial instruments such as letters of credit, letters of guarantee, negotiable instruments, certificates of deposit or certificates of creditworthiness, etc. that do not agree with the facts.

    A banking institution that practices fraud by issuing a financial instrument such as a letter of credit, letter of guarantee, negotiable instrument, certificate of deposit or certificate of creditworthiness, etc. that does not agree with the facts shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time bur not more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,000 yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to the disciplinary sanction of dismissal; if the criminal offence of illegally issuing a financial instrument or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 14  Banking institutions may not accept, discount, pay or guarantee negotiable instruments which violate provisions of the law on negotiable instruments.

    A banking institution that accepts, discounts, pays or guarantees a negotiable instrument which violates provisions of the law on negotiable instruments shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a major demerit; if a loss of funds results, the said banking institution's senior management employees directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if the criminal offence of accepting, paying or guaranteeing an illegal negotiable instrument or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 15  In conducting deposit businesses, banking institutions may not:

    (1) without authorization, raise interest rates or covertly raise interest rates to attract deposits;

    (2) permit an account to be opened in the name of an individual for the purpose of depositing funds which the banking institution knows well or should know to be funds of a unit;

    (3) launch new types of deposit business without authorization;

    (4) accept deposits which do not meet People's Bank of China regulations on customer scope, time limit or minimum amount;

    (5) open multiple accounts for clients in violation of regulations; or

    (6) carry out other deposit acts in violation of People's Bank of China regulations.

    A banking institution that commits any one of the acts mentioned in the preceding paragraph shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal, and the other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from demotion to dismissal; if the circumstances are serious, the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct banking business shall be revoked.

    Article 16  In conducting loan business, banking institutions may not:

    (1) grant unsecured loans to connected persons;

    (2) grant secured loans to connected persons on terms more favorable than those offered to other borrowers of the same kind of loans;

    (3) raise or lower interest rate in violation of regulations or make loans by other improper methods; or

    (4) carry out other lending acts in violation of People's Bank of China regulations.

    A banking institution that commits any one of the acts mentioned in the preceding paragraph shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,00 yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if the circumstances are serious, the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct banking business shall be revoked; if the criminal offence of illegally making loans to connected persons, illegally granting loans or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 17  In conducting inter-banking-institution lending, banking institutions may not:

    (1) grant inter-banking-institution loans in excess of the maximum permissible amount;

    (2) grant inter-banking-institution loans of a term exceeding the maximum permissible term;

    (3) conduct inter-banking-institution lending business if they do not have the qualifications to conduct such business;

    (4) conduct inter-banking-institution lending business outside the national unified inter-banking-institution lending network;

    (5) engage in other inter-banking-institution lending acts in violation of People's Bank of China regulations.

    A banking institution that commits any one of the acts mentioned in the preceding paragraph shall be subjected to a temporary suspension or termination of the said business and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,00 yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a demerit to dismissal.

    Article 18  Banking institutions may not violate State regulations by conducting securities, futures or other derivatives transactions, provide credit funds or guarantees for securities, futures or other derivatives transactions, or violate State regulations by investing in immovable property not for their own use, equity or industry, etc.

    A banking institution that violates the provisions of the preceding paragraph shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,00 yuan; the senior management employees of the banking institution directly responsible shll be subjected to the disciplinary sanction of dismissal, and the other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if the circumstances are serious, the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct banking business shall be revoked; if the criminal offence of illegal operation, illegally granting of loans or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 19  Banking institutions shall comply with the provisions of the People's Bank of China on cash control, and they shall not permit any units or individuals to withdraw cash exceeding the permissible limit.

    A banking institution that violates the provisions of the People's Bank of China on cash control by permitting units or individuals to withdraw cash exceeding the permissible limit and its illegal income shall be given a warning and fined not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a major demerit to dismissal.

    Article 20  Banking institutions shall comply with the provisions of the People's Bank of China on control over credit card, and shall not violate provisions by permitting credit cardholders to make overdrafts or aiding them to use their credit cards to illicitly obtain cash.

    A banking institution that violates the provisions of the People's Bank of China on control over credit card by permitting credit cardholders to make overdrafts or aiding them to use their credit cards to illicitly obtain cash shall be given a warning and fined not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a major demerit to dismissal.

    Article 21  Banking institutions shall comply with the provisions of the People's Bank of China on the administration of asset-liability ratios.

    A banking institution that violates the provisions of the People's Bank of China on the administration of asset-liability ratios shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from recording of a major demerit to dismissal.

    Article 22  Banking institutions shall not tie up public finance deposits or funds.

    A banking institution that ties up public finance deposits or funds shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal and the other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from demotion to dismissal.

    Article 23  Banking institutions shall, according to law, assist the tax and customs authorities in carrying out the freezing or the seizing and transferring of taxpayers' deposits.

    A banking institution that violates the provisions of the preceding paragraph, resulting in the loss of tax revenue, shall be given a warning and fined not less than 100,000 yuan but not more than 500,00 yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if a violation of public security administration is constituted, they shall be subjected to public security administration penalties according to law; if the criminal offence of obstructing official business or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 24  Banking institutions engaging in foreign exchange business shall comply with the provisions of the State on foreign exchange control.

   A banking institution engaging in foreign exchange business that violates the provisions of the State on foreign exchange control shall be subjected to administrative penalties according to the provisions of the regulations on foreign exchange control; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a demerit to dismissal; if the circumstances are serious, the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if a criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 25  Banking institutions engaging in foreign exchange business may not cot:

    (1) fail to promptly report unusual circumstances such as large or frequent purchase of foreign exchange, or the deposit or withdrawal of large amounts of foreign currency in cash; or

    (2) fail to declare its balance of international receipts and payments according to provisions.

    A banking institution engaging in foreign exchange business that commits any one of the acts mentioned in the preceding paragraph shall be given a warning and fined not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a demerit to dismissal; if the circumstances are serious, the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if the criminal offence of being defrauded due to dereliction of duty in the signing or performance of a contract or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 26  Commercial banks may not permit overdrafts for the purpose of clearing funds for securities or futures transactions or for the purpose of applications for purchase of new shares.

    A commercial bank that permits overdrafts for the purpose of clearing funds for securities or futures transactions or for the purpose of applications for purchase of new shares shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,000 yuan; the senior management employees of the commercial bank directly responsible shall be subjected to disciplinary sanctions of dismissal, and other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal.

    Article 27  Finance companies may not:

    (1) issue finance company bonds on a scale exceeding that approved by the People's Bank of China;

    (2) take in deposits form, or grant loans to, units that are not group members;

    (3) furnish banking services to units that are not group members, in violation of provisions; or

    (4) carry out other acts in violation of provisions of the People's Bank of China.

    A finance company that carries out any one of the acts mentioned in the preceding paragraph shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,000 yuan; the senior management employees of the finance company directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a demerit to dismissal; if the circumstances are serious, the finance company shall be ordered to suspend business and carry out rectification and the senior management employees directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if the criminal offence of illegally taking in deposits from the public, the criminal offence of issuing shares or corporate bonds without authorization or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 28  Trust and investment companies may not take in deposits from or grant loans to the public in the name of conducting entrustment or trust business, and may not violate provisions of the State in conducting entrustment or trust business.

    A trust and investment company that inviolate the provisions of the preceding paragraph shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,000 yuan; the senior management employees of the trust and investment company directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a major demerit to dismissal; if the circumstances are serious, the said business shall be temporarily suspended or terminated, and the senior management employees directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if the criminal offence of illegally taking in deposits from the public, the crime of fraudulent raising of funds or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 29  The fines paid by, and the illegal income confiscated from, a banking institution shall not be itemized under the costs and expenses of the banking institution.

    Article 30  These Measures are applicable to the punishment of illegal banking acts undertaken by institutions engaging in banking business under the People's Bank of China.

    Article 31  These Measures are not applicable to the punishment of illegal securities acts, which shall be punished according to the provisions of the relevant laws or administrative regulations of the State on the administration of securities.

    These Measures are not applicable to the punishment of the illegal insurance acts, which shall be punished according to the relevant laws or administrative regulations of the State on the administration of insurance.