People’s Bank of China, China Banking Regulatory Commission, State Administration of Foreign Exchange Circular of PBC, CBRC and SAFE on Promulgating the Interim Measures for the Administration of Commercial Banks Providing Overseas Yin Fa [2006] No. 121 April 17, 2006 To Shanghai Head Office of the People’s Bank of China, all branches and business management departments and the central sub-branches For the purpose of advancing the convertibility of Renminbi capital accounts in an orderly and controllable way, meeting the reasonable All branches and business management departments of the People’s Bank of China shall transmit it to the commercial banks and foreign Appendix: The Interim Measures for the Administration of Commercial Banks Providing Overseas Financial Management Services Interim Measures for the Administration of Commercial Banks Providing Overseas Financial Management Services Chapter I General Provisions Article 1 For the purpose of regulating commercial banks’ provision of overseas financial management services, the present Measures are formulated Article 2 The term “overseas financial management services ” as mentioned in the present Measures shall refer to the business activities carried Article 3 The China Banking Regulatory Commission (hereinafter referred to as “the CBRC”) shall take charge of the access administration and Article 4 The State Administration of Foreign Exchange (hereinafter referred to as “the SAFE”) shall take charge of the foreign exchange quota Article 5 The commercial bank shall accord with the laws and regulations of the state, the provisions of the state on foreign exchange administration Article 6 Where a commercial bank is entrusted by a domestic individual resident to provide overseas financial management services, it shall Article 7 A commercial bank shall take practical and effective measures to strengthen the management of relevant risks when providing overseas Chapter II Management of Business Access Article 8 The commercial bank shall apply to the CBRC for approval when intending to provide overseas financial management services. Article 9 The commercial bank that provides overseas financial management services shall be a designated foreign exchange bank, which shall (1) It has established an effective market risk management system and has improved it; (2) It has sound internal control rules; (3) It has the capacities for and experiences in overseas investment management; (4) It has not been penalized by the CBRC within one year before applying for the financial management activities; and (5) Other prudential conditions as required by the CBRC. Article 10 The commercial bank shall submit the following materials (in triplets) when applying to the CBRC for the qualification for providing (1) A letter of application; (2) Relevant rules on internal control and risk management; (3) Draft of the custody agreement; and (4) Other documents as required by the CBRC. Article 11 The CBRC shall examine and approve the commercial banks’ qualifications for overseas financial management services in accordance with Article 12 Where a commercial bank sells personal financial management products within the territory of China after obtaining the qualification Where a commercial bank sells financial management products or provides integrated financial management services to domestic institutions Chapter III Quota of Foreign Exchange Purchased for Investment and Conversion Administration Article 13 Where a commercial bank is entrusted by an investor to purchase foreign exchange with Renminbi to provide overseas financial management Where a commercial bank is entrusted by an investor to invest in overseas financial management with the investor’s own foreign exchange, Article 14 The commercial bank shall submit the following documents to the SAFE when applying for the quota of foreign exchange purchased for (1) A letter of application (including but not limited to the basic information on the applicant, the requested quota of foreign exchange (2) Approval document on the business qualification issued by the CBRC; (3) Draft of the custody agreement; (4) Sample of the agreement of entrustment (in standard form) to be concluded with the certain investor, which shall include the rights (5) Other documents required by the SAFE. The SAFE shall make a reply on approval or disapproval, and notify the applicant in written form and send a copy to the CBRC, within Article 15 The commercial bank may issue to investors the overseas financial management products whose prices are marked in Renminbi within the Article 16 The commercial bank shall pay the investment principals and proceeds to the investors after the overseas financial management funds Article 17 The quota of net foreign exchange purchased by a commercial bank for providing overseas financial management services shall not exceed Article 18 The commercial bank shall take effective measures to hedge and cope with the foreign exchange rate risks of overseas financial management Chapter IV Administration of Inward and Outward Funds Article 19 The commercial bank shall entrust another domestic commercial bank approved by the CBRC for custody business as the custodian to keep Article 20 Besides the duties as prescribed by the CBRC, the custodian shall perform the following ones: (1) Opening the domestic custody account, the settlement account on use of overseas foreign exchange funds, and the securities custody (2) Supervising the commercial bank’s investment operation, and in case any of the commercial bank’s investment instructions violates (3) Preserving the relevant information such as the records on the remittance and conversion of the commercial bank’s funds, collection (4) Making statistical reports on the balance of international payments according to the provisions; (5) Assisting the SAFE in inspecting the use of the commercial bank’s funds abroad; and (6) Other duties as prescribed by the SAFE in light of the principle of prudential supervision. Article 21 The custodian shall submit the relevant reports according to the following requirements: (1) Reporting the fact to the CBRC and the SAFE within 5 working days as of opening domestic custody account, the settlement account on (2) Reporting the remittance of funds to the SAFE within 5 working days as of the day when the commercial bank remits the principal or (3) Reporting the income and expenditures of the commercial bank’s domestic custody account to the SAFE within 5 working days as of the (4) Submitting the commercial bank’s statement on using foreign exchange funds abroad in the last year to the SAFE within 1 month as of (5) In case any of the commercial bank’s investment instructions violates any law or rule, timely reporting it to the CBRC and the SAFE; (6) Other reporting matters as prescribed by the CBRC and the SAFE. Article 22 The commercial bank shall bring the approval document to conclude a custody agreement with the domestic custodian, and open a domestic Article 23 The scope of income of a commercial bank’s domestic custody account shall include the foreign exchange funds transferred by the commercial The scope of expenditure of a commercial bank’s domestic custody account shall include the funds transferred into the settlement account Article 24 In light of the principle of prudence, the domestic custodian shall select an overseas financial institution as its overseas custody The domestic custodian shall open the settlement account for the use of the commercial bank’s foreign exchange funds and the securities Article 25 The domestic custodian and its overseas custody agent shall separately set up custody accounts for different commercial banks. Chapter V Disclosure of Information and the Supervision and Administration Article 26 The commercial bank shall conform to the relevant risk management provisions of the CBRC when buying overseas financial products. The CBRC shall supervise the risks in commercial banks’ overseas financial management services in accordance with the relevant laws Article 27 The commercial bank that provides overseas financial management services shall inform the investors in details and in an all-round Article 28 The commercial bank that provides overseas financial management services shall disclose the information on investment conditions, Article 29 The commercial bank that provides overseas financial management services shall perform the obligations of making statistical reports Article 30 The SAFE may adjust the quota of commercial banks that provide overseas financial management services for purchasing foreign exchange Article 31 The CBRC and the SAFE may require a commercial bank, a domestic custodian or an overseas custody agent to provide the relevant information Article 32 In case a commercial bank is under any of the following circumstances, it shall report the circumstance to the CBRC and the SAFE for (1) The custodian or the custody agent is changed; (2) The registered capital of the company or the structure of shareholders is changed greatly; (3) It has been involved in any lawsuit or severely penalized; or (4) Other circumstances as prescribed by the CBRC and the SAFE. Article 33 In case a commercial bank’s domestic custodian is under any of the following circumstances, it shall report the circumstance to the (1) Its registered capital or stock right structure is changed greatly; (2) It has been involved in any major lawsuit or severely penalized; or (3) Other matters as prescribed by the SAFE. Article 34 Where a commercial bank or its domestic custodian violates the present Measures, it shall be given administrative penalties by the Chapter VI Supplementary Provisions Article 35 Where a commercial bank invests in the financial products in Hong Kong Special Administrative Region or Macao Special Administrative Article 36 The power to interpret the present Measures shall remain with the People’s Bank of China and the CBRC. Article 37 The present Measures shall come into force as of the date of promulgation. |
People’s Bank of China, China Banking Regulatory Commission, State Administration of Foreign Exchange
2006-04-17