Laws of the People's Republic of China

The State Administration of Foreign Exchange

Supplementary Circular of the State Administration of Foreign Exchange on Issues Concerning Penalties for Foreign Exchange Purchase Fraud

HuiChuan [1996] No.22

December 6, 1996

The branches of the State Administration of Foreign Exchange in all provinces, autonomous regions, municipalities directly under the Central Government, municipalities separately listed on the State plan and special economic zones:

In January 1996, our administration issued the Circular on Relevant Issues Concerning the Investigation and Prosecution of Foreign Exchange Purchase Fraud (HuiGuanHanZi [96] No.18), requiring all local foreign exchange administrative bureaus to carry out timely investigation and prosecution of foreign exchange purchase frauds. Now a supplementary circular on issues concerning penalties is notified as follows:

1.

Once a foreign exchange purchase fraud with false documents is verified:

a.

In cases where the enterprise that made the false document and that purchased the foreign exchange are the same party, the relevant foreign exchange administrative bureau may impose economic penalties on the party first before handing it over to the relevant public security department.

b.

In cases where the enterprise that made the false document and that purchased the foreign exchange are not the same party, the relevant foreign exchange administrative bureau shall impose economic penalties only on the enterprise that purchased the foreign exchange, while handing the enterprise that made or provided the false document over to the relevant public security department in time.

2.

Enterprises that have been verified upon investigation of foreign exchange purchase fraud shall be treated in accordance with the relevant stipulations in Article 8 and Article 27 with the sum of penalty in principle not beyond 30% of that of the foreign exchange purchased by the enterprises for frauds taking place before April 1, 1996, or in accordance with Paragraph 4, Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration for frauds taking place after April 1, 1996.

3.

Local foreign exchange administrative bureaus shall inform designated local foreign exchange banks that for a stated period every single foreign exchange purchase by enterprises involved in foreign exchange purchase fraud with false documents shall be verified by competent foreign exchange administrative bureaus and that the designated foreign exchange banks shall sell foreign exchange to these enterprises only upon presentation of the approval documents by competent foreign exchange administrative bureaus.

4.

All local foreign exchange administrative bureaus shall report in written form, along with a statistical table of foreign exchange purchase fraud, to the State Administration of Foreign Exchange before December 20, 1996.

Attachment: Statistical Table of Foreign Exchange Purchase Fraud (omitted)