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DECISION OF THE STANDING COMMITTEE OF THE NPC CONCERNING THE MODIFICATION OF THE BANKING SUPERVISION LAW OF THE PEOPLE’S REPUBLIC OF CHINA

Order of the President of the People’s Republic of China

No. 58

The Decision of the Standing Committee of the NPC concerning the Modification of the Banking Supervision Law of the People’s Republic
of China, which was adopted at the 24th meeting of the Standing Committee of the 10th NPC of the People’s Republic of China on October
31, 2006, is hereby announced and shall enter into force as from January 1, 2007.
President of the People’s Republic of China Hu Jintao

October 31, 2006

Decision of the Standing Committee of the NPC concerning the Modification of the Banking Supervision Law of the People’s Republic
of China

(Adopted at the 24th meeting of the Standing Committee of the 10th NPC of the People’s Republic of China on October 31, 2006)

The decision is made at the 24th meeting of the Standing Committee of the 10th NPC of the People’s Republic of China to modify the
Banking Supervision Law of the People’s Republic of China as follows:

1.

A new article shall be added as Article 42 : “When implementing any inspection of banking financial institutions, the banking regulatory
organ may, pursuant to approval of the person in charge of the banking regulatory organ at or above the level of districted city,
take the following steps against any entity or individual under the suspicion of being involved in illegal acts:

(1)

Inquiring about the related entity or individual, and requiring it/him to explain the related issues;

(2)

Inspecting and copying related financial accounting, property registration and other documents and materials;

(3)

Implementing advanced registration and preservation of documents and materials which may be transferred, concealed, destroyed or falsified.”

“When the banking regulatory organ takes the steps prescribed in the previous Paragraph, there shall be no less than two functionaries
with showing lawful certificates and investigation notices. In case there are less than two investigation functionaries or they fail
to show lawful certificates or investigation notices, the related entity or individual shall have the right to refuse the investigation.
If the steps are adopted in according to law, the related entity or individual shall give coordination, faithfully explain the related
conditions and provide related documents and materials, and shall not refuse to do so, or hamper or hide anything.”

2.

Article 42 shall be modified into Article 43 , and a new item shall be added to paragraph 1 as Item 6: “Investigating the related
entity or individual against Article 42 of the present Law”.

Paragraph 2 shall be modified as: “In case any functionary for supervision and administration in the banking regulatory organ embezzles
public funds, accepts bribes, divulges state secrets, commercial secrets or personal privacy, if any crime is committed, he shall
be prosecuted for criminal liabilities; and if no crime is committed, he shall be given an administrative sanction in accordance
with law.”

3.

A new article shall be added as Article 49 : “If anyone hampers any inspection or investigation legally carried out by the functionaries
of the banking regulatory organ, he shall be given a public security administrative penalty; and if any crime is committed, he shall
be prosecuted for criminal liabilities.”

The present Decision shall enter into force as from January 1, 2007.

The Banking Supervision Law of the People’s Republic of China shall be re-announced after the Modifications have been made and the
sequential numbers of the articles are accordingly adjusted subject to the present Decision.



 
the Standing Committee of the NPC
2006-10-31

 






DECISION OF THE STANDING COMMITTEE OF THE NPC CONCERNING THE RATIFICATION OF THE TREATY OF NEIGHBORHOOD FRIENDSHIP AND COOPERATION BETWEEN THE PEOPLE’S REPUBLIC OF CHINA AND THE ISLAMIC REPUBLIC OF AFGHANISTAN

Decision of the Standing Committee of the NPC concerning the Ratification of the Treaty of Neighborhood Friendship and Cooperation
between the People’s Republic of China and the Islamic Republic of Afghanistan

October 31, 2006

(Adopted at the 24th Meeting of the Standing Committee of the 10th NPC on October 31, 2006)

At the 24th meeting of the Standing Committee of the 10th NPC, it is decided that the Treaty of Neighborhood Friendship and Cooperation
between the People’s Republic of China and the Islamic Republic of Afghanistan which is signed by President Hu Jintao on behalf of
the People’s Republic of China on June 19, 2006 is hereby ratified.



 
the Standing Committee of the NPC
2006-10-31

 






LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON ANTI-MONEY LAUNDERING

Order of the President of the People’s Public of China

No. 56

The Law of the People’s Republic of China on Anti-money Laundering adopted at the 24th session of the Standing Committee of the 10th
National People’s Congress of the People’s Republic of China is hereby promulgated and shall enter into effect as of January 1, 2007.

Hu Jingtao, President of the People’s Republic of China

October 31, 2006

Law of the People’s Republic of China on Anti-money Laundering

(Adopted at the 24th session of the Standing Committee of the 10th National People’s Congress)

Table of Contents
Chapter I General Provisions

Chapter II Supervision and Administration on Anti-money Laundering

Chapter III Obligations of Financial Institutions for Anti-money Laundering

Chapter IV Investigation on Anti-money Laundering

Chapter V International Cooperation on Anti-money Laundering

Chapter VI Legal Liabilities

Chapter VII Supplementary Provisions
Chapter I General Provisions

Article 1

For the purpose of preventing money-laundering, maintaining the financial order and restraining the crime of money-laundering and
other related crimes, the present Law is formulated.

Article 2

The term “anti-money laundering” as mentioned in the present Law refers to the act of adopting related measures in accordance with
the provisions of the present Law to prevent any money laundering activity so as to conceal or disguise, by all means, the sources
and nature of criminal proceeds generated from any drug crime, organized crime in the nature of gangland, crime of terrorism, crime
of smuggling, crime of corruption or bribery, crime of disrupting the financial management order, crime of financial fraud and etc..

Article 3

Financial institutions which are established within the territory of the People’s Republic of China or special non-financial institutions
that shall fulfill the obligations of anti-money laundering, shall adopt related prevention and supervision measures under law, establish
and improve the clients’ identity identification system, the preservation system of clients’ identity materials and transactional
records, the reporting system of large-sum transactions and doubtful transactions, and fulfill their respective anti-money laundering
obligations.

Article 4

The competent department for anti-money laundering of the State Council shall be responsible for anti-money laundering supervision
and administration throughout the country. The related departments and organs under the State Council shall, within their respective
scope of functions and duties, fulfill their obligations of anti-money laundering supervision and administration.

The competent department of anti-money laundering of the State Council, the related departments and organs under the State Council
and the judicial organs shall cooperate with each other in the anti-money laundering work.

Article 5

The identity material or transactional information of any client, which is acquired during the performance of the duties and functions
of anti-money laundering under law, shall be kept confidential. None of the aforesaid information may be provided to any entity or
individual unless it is admitted by related provisions of law.

The identity material and transactional information of any client, which is acquired by the competent department of anti-money laundering
or any other department or organ undertaking the obligation of anti-money laundering supervision and administration under law when
fulfilling their anti-money laundering functions and duties, shall only be used in the administrative investigation for anti-money
laundering.

The identity material and transactional information of any client as acquired by the judicial organ according to the present Law shall
only be used in the criminal litigation on anti-money laundering.

Article 6

The submission of a report on large-sum transaction or doubtful transaction under law by any organ or functionary bearing the anti-money
laundering obligation, shall be protected by law.

Article 7

In case any entity or individual finds any money laundering activity, it/he has the right to tip it off to the competent department
of anti-money laundering or to the public security organ. The organ accepting the tip-off shall keep confidential the tip-off maker
as well as the tipped￿Coff contents.

Chapter II Supervision and Administration on Anti-money Laundering

Article 8

The competent department for anti-money laundering of the State Council shall organize and coordinate the anti-money laundering work
throughout the country, take charge of the supervision over anti-money laundering funds, formulate the related anti-money laundering
regulations of financial institutions by itself or in collaboration with the related financial regulatory bodies under the State
Council, undertake supervision and examination on the performance of anti-money laundering obligations by financial institutions,
investigate into doubtful transactions within the power limit of its functions and duties, and fulfill other duties and functions
of anti-money laundering prescribed by law or by the State Council.

The organs dispatched by the competent department for anti-money laundering of the State Council shall, within their respective power
limits as authorized by the competent department for anti-money laundering of the State Council, undertake supervision and examination
on the performance of anti-money laundering obligations by financial institutions.

Article 9

The related financial supervision and administration institutions under the State Council shall take part in the formulation of anti-money
laundering regulations for financial institutions under their respective supervision and administration, require them to establish
and improve an internal control system of anti-money laundering and fulfill other duties and functions of anti-money laundering as
prescribed by law or by the State Council.

Article 10

The competent department for anti-money laundering of the State Council shall establish an Anti-money Laundering Information Center
to be responsible for accepting and analyzing the reports on large-sum transactions and doubtful transactions, report the analysis
results to the competent department for anti-money laundering of the State Council in light of the related provisions, and fulfill
other functions and duties as prescribed by the competent department for anti-money laundering of the State Council.

Article 11

The competent department for anti-money laundering of the State Council, in order to fulfill its duties and functions of supervising
anti-money laundering funds, may collect necessary information from related departments and organs of the State Council, which shall
provide assistance.

The competent department for anti-money laundering of the State Council shall circulate the anti-money laundering work to related
departments and organs of the State Council on a periodical basis.

Article 12

If the customs finds that any cash or secret securities carried by an individual exceed the prescribed sum, it shall report the case
to the competent department for anti-money laundering in a timely manner.

The standards of amount that shall be circulated in the preceding paragraph shall be prescribed by the competent department of anti-money
laundering of the State Council in conjunction with the General Administration of Customs.

Article 13

If the competent department for anti-money laundering or any other department or organ undertaking the obligation of anti-money laundering
supervision and administration under law finds any transaction involved in the crime of money laundering, it shall report it to the
investigation organ in time.

Article 14

If the related financial supervision and administration institution under the State Council conducts examination and approval of
the establishment of a new financial institution or establishment of any branch or sub-branch of a financial institution, it shall
examine the internal control system of anti-money laundering of the new institution and may not approve any application for establishment
that fails to accord with the provisions of the present Law.

Chapter III Obligations of Financial Institutions for Anti-money Laundering

Article 15

Financial institutions shall, in accordance with the provisions of the present Law, establish and improve their internal control
systems for anti-money laundering, and the principal thereof shall be responsible for the effective implementation of their internal
control systems for anti-money laundering.

Financial institutions shall establish special institutions of anti-money laundering or designate internal departments to be responsible
for anti-money laundering.

Article 16

Financial institutions shall establish a clients’ identity identification system in accordance with the related provisions.

If any financial institution establishes business relationship with a client or provides one-off financial services such as cash remittance,
cash conversion and bill payment beyond the prescribed amount, it shall require the client to show its/his authentic and effective
identity certificate or any other identity certification document, and make related verification and registration.

If a client entrusts an agent to deal with the transaction on its/his behalf, the related financial institution shall make verification
and registration of the identity certificates or other identity certification documents of both the agent and the principal at the
same time.

If a financial institution establishes business relationship of personal insurance or trust with his client, in case the contractual
beneficiary is not the client himself, the financial institution shall make verification and registration of the identity certificate
or any other identity certification document of the beneficiary as well.

Financial institutions may not provide any service to or make any trade with any client who fails to clarify his identity or establish
any anonymous or pseudonymous account.

If a financial institution has any doubt about the authenticity, effectiveness or integrality of a client’s identity material, it
shall check the client’s identity again.

In case any entity or individual establishes business relationship with any financial institution or requires it to provide any one-off
financial service, it/he shall provide its/his authentic and effective identity certificate or any other identity certification document.

Article 17

If a financial institution certifies the identity of its client through a third party, it shall be assured that the third party has
adopted measures for clients’ identity clarification as prescribed by the present Law. In case any third party fails to adopt the
measures for the clients’ identity clarification as prescribed by the present Law, the financial institution shall bear the liabilities
for its failure to fulfill the obligation of clarifying the client’s identity.

Article 18

Financial institutions when conducting the clarification of its clients’ identities, may, if it so requires, verify the related identity
information with departments such as the public security organ and the competent department for industry and commerce.

Article 19

Financial institutions shall establish a preservation system for its clients’ identity materials and transaction records.

During the existence of business relationship, any client’s identity material that changes shall be updated in time.

After the conclusion of any business relationship or transaction, the related clients’ identity materials or clients’ transaction
information shall be kept for at least 5 years.

If a financial institution goes bankrupt or is dissolved, it shall transfer the related clients’ identity materials and transaction
records to the institution designated by the related department of the State Council.

Article 20

Financial institutions shall, in light of the related provisions, carry out the reporting system of large-sum transactions and doubtful
transactions.

If any single transaction handled by a financial institution or the accumulated transaction within a prescribed time limit goes beyond
the prescribed sum, or if any doubtful transaction is found, it shall be timely reported to the Anti-money Laundering Information
Center.

Article 21

The specific measures for a financial institution to establish a clients’ identity clarification system and a preservation system
for its clients’ identity materials and transactional records shall be formulated by the competent department for anti-money laundering
of the State Council in conjunction with the related financial supervision and administration institution under the State Council.
The specific measures for reporting large-sum transactions and doubtful transactions by financial institutions shall be formulated
by the competent department for anti-money laundering of the State Council.

Article 22

Financial institutions shall, in light of the requirements for anti-money laundering prevention and supervision, carry out anti-money
laundering trainings and drumbeating.

Chapter IV Investigation on Anti-money Laundering

Article 23

If the competent department of anti-money laundering of the State Council or any its provincial dispatched organs finds any doubtful
transaction, if an investigation and verification is therefore required, it may conduct an investigation into the related financial
institutions which shall provide assistance and faithfully provide the related documents and materials.

For the investigation into any doubtful transaction, there shall be not less than 2 investigators, who shall show their legal certificates
and the investigation notice produced by the competent department for anti-money laundering of the State Council or the organ dispatched
thereof at the provincial level. In case the investigators are fewer than 2, or the related legal certificate or investigation notice
fails to be shown, the financial institution subject to investigation has the right to refuse the investigation.

Article 24

For the investigation into any doubtful transaction, the related investigators may inquire of the related personnel of related financial
institutions about related information.

A transcript shall be made for an inquiry, and shall be checked against the person being inquired. In the case of any omission or
mistake in the transcript, the person being inquired may request for supplementation or correction. After the person being inquired
confirms that the transcript is inerrant, he shall render his signature or seal thereto. And the related investigators shall render
their signatures onto the transcript as well.

Article 25

If a further examination is required during an investigation, the investigator may, upon the approval of the principal of the competent
department for anti-money laundering of the State Council or the organ dispatched thereof at the provincial level, consult and photocopy
the related account information, transactional records and any other related materials of the inquired institution or persons, and
may seal up any document or material that may be transferred, concealed, sophisticated or destroyed.

If an investigator seals up any document or material, he shall, together with the related personnel of the investigated financial
institution on the spot, check them out and produce a checklist in duplicate, to which the signatures or seals of investigators and
personnel of the financial institutions on the spot shall be rendered. One copy shall be delivered to the financial institution,
and the other be attached to the related file for reference.

Article 26

In case any suspicion of money laundering can still not be cleared off upon investigation, the case shall be reported to the competent
investigation organ immediately. If any client requires transferring the account capital as involved in the investigation to a foreign
country, temporary freezing measures may be adopted, upon the approval of the principal of the competent department for anti-money
laundering of the State Council.

After the investigation organ receives a case, it shall timely decide whether or not to further freeze the capital as temporarily
frozen up in accordance with the provisions of the preceding paragraph. If it deems that it is necessary to continue freezing the
capital, freezing measures shall be adopted according to the provisions of the Criminal Litigation Law. In case it deems that it
is unnecessary to freeze the capital any more, it shall immediately notify the competent department for anti-money laundering of
the State Council, which shall immediately notify the related financial institution to lift the freeze.

The temporary freezing shall not exceed 48 hours. If a financial institution does not receive any notice on continuing freezing from
the investigation organ within 48 hours after it adopts temporary freezing measures pursuant to the requirements of the competent
department for anti-money laundering of the State Council, it shall immediately lift the freeze.

Chapter V International Cooperation on Anti-money Laundering

Article 27

The People’s Republic of China shall, in light of the international treaties that China has concluded or acceded to or according
to the principles of equality and reciprocity, carry out the international cooperation on anti-money laundering.

Article 28

The competent department for anti-money laundering of the State Council shall, pursuant to the authorization of the State Council,
represent the Chinese government to make anti-money laundering cooperation with foreign governments and related international organizations,
exchange the related information and materials involved in anti-money laundering with overseas anti-money laundering institutions
under law.

Article 29

Juridical assistance for investigation into any crime of money laundering shall be made by the judicial organ in accordance with
the provisions of related laws.

Chapter VI Legal Liabilities

Article 30

If any functionary of the competent department for anti-money laundering or any other department or organ undertaking the functions
and duties of anti-money laundering supervision and administration is under any of the following circumstances, an administrative
sanction shall be imposed upon under law:

(1)

making examination, investigation or adopting any temporary freezing measures in violation of the related provisions;

(2)

divulging any state secret, commercial secret or individual privacy, which he has access to in his anti-money laundering work;

(3)

imposing any administrative punishment on the related institution and personnel in violation of the related provisions; or

(4)

having any act of failing to perform his duties and functions under law.

Article 31

If a financial institution has any of the following acts, the competent department for anti-money laundering of the State Council
or the dispatched organ authorized thereof at or above the districted city level shall order it to make corrections within a time
limit. If the circumstance is serious, it shall advise the related financial supervision and administration institution to order
the related financial institution to give a disciplinary sanction to its directly liable chairperson, senior managers or any other
person directly responsible under law:

(1)

failing to establish an internal control system of anti-money laundering according to the related provisions;

(2)

failing to establish a special institution for anti-money laundering or designate an internal department to take charge of anti-money
laundering; or

(3)

failing to conduct anti-money laundering trainings to its employees according to the related provisions.

Article 32

If a financial institution is under any of the following circumstances, the competent department for anti-money laundering of the
State Council or the dispatched organ authorized thereof at or above the districted city level shall order it to make corrections.
If the circumstance is serious, a fine of 20, 000 Yuan up to 50, 000 Yuan shall be imposed on the financial institution and a fine
of 10, 000 Yuan up to 50, 000 Yuan shall be imposed upon its directly liable chairman, senior managers or any other person directly
responsible:

(1)

failing to fulfill the obligation of certifying any clients’ identity according to the related provisions;

(2)

failing to preserve the clients’ identity materials and transactional records according to the related provisions;

(3)

failing to make related reports on large-sum transactions or doubtful transactions according to the related provisions;

(4)

trading with any client who fails to clarify its/his identity or establishes any anonymous account or pseudonymous account therefor;

(5)

violating the related confidential provisions or divulging any related information;

(6)

refusing or retarding any anti-money laundering examination or investigation; or

(7)

refusing to provide any investigation material or providing any false material on purpose.

If a financial institution has any of the aforesaid acts and thus results in the consequence of money laundering, a fine of 500, 000
Yuan up to 5, 000, 000 Yuan shall be imposed upon the financial institution and a fine of 50, 000 Yuan up to 500, 000 Yuan shall
be imposed upon its directly liable chairman, senior managers or any other person directly responsible. If the circumstance is serious,
the competent department for anti-money laundering may advise the related financial supervision and administration institution to
order the financial institution to suspend its business for rectification or to revoke its business license.

As to the directly liable chairman, senior managers or any other person directly responsible of a financial institution as prescribed
in the preceding two paragraphs, the competent department of anti-money laundering may advise the related financial supervision and
administration institution to order the financial institution to give a disciplinary sanction thereto or revoke his qualification
to hold a post and prohibit him from engaging in any financial work.

Article 33

If anyone violates the provisions of the present Law and thus a crime is constituted, he shall be subject to criminal liabilities
under law.

Chapter VII Supplementary Provisions

Article 34

“Financial institutions” as mentioned in the present Law refer to the policy banks, commercial banks, credit cooperatives, post savings
institutions, trust investment companies, securities companies, futures brokerage companies, insurance companies and any other institution,
which have been determined and publicized by the competent department for anti-money laundering of the State Council to engage in
financial undertakings.

Article 35

The scope of the special non-financial institutions that shall perform the obligation of anti-money laundering, the specific anti-money
laundering obligations thereof and the specific measures for supervision and administration on special non-financial institutions
shall be formulated by the competent department for anti-money laundering of the State Council in conjunction with the related departments
of the State Council.

Article 36

The supervision over any fund suspected of being involved in any terrorism activity shall be subject to the present Law. If there
is any other provision in this regard, such provision shall prevail.

Article 37

The present Measures shall enter into effect as of January 1, 2007.



 
The Standing Committee of the National People’s Congress
2006-10-31

 






OPINIONS OF CHINA INSURANCE REGULATORY COMMISSION ON INTENSIFYING INSURANCE FUND RISK MANAGEMENT

Opinions of China Insurance Regulatory Commission on Intensifying Insurance Fund Risk Management

October 31, 2006

Each insurance company and each insurance asset management corporation:

For the purpose of implementing “Some Opinions of the State Council on Reforming and Developing the Insurance Industry” (hereinafter
referred to as “Some Opinions”), setting up and improving the risk management system and operation mechanism of insurance funds,
conscientiously preventing risks of the insurance fund management, and promoting the insurance industry to develop rapidly and smoothly,
the opinions are hereby set forth as follows:

1.

Unifying the understanding, enhancing the awareness, and intensifying the overall risk management.

In recent years, the insurance industry earnestly implemented the guidelines and policies of the Party’s Central Committee and the
State Council, actively participated in the implementation of significant state strategies, constantly accelerated the speed of the
insurance business’s development , enlarged the insurance fund scale, and propelled insurance fund management to go into a new stage
of development. Through the whole industry’s arduous efforts, the insurance fund management has been changed profoundly, the reform
of the system has undergone a great breakthrough, the institutional construction has been continuously improved, the operational
mechanism has been gradually perfected, the investment channels have been gradually broadened, and the investment income has been
steadily increased, As a result, the financial reform has been powerfully supported, the economic development promoted, and the status
of the insurance industry in national economic and social development effectively heightened.

With the deepening of the financial reform, there are more and more risk factors in insurance fund management, the cross-market and
cross-industrial risks have begun to infiltrate and be forwarded to the insurance industry, and some risks might become systematic
risks, on which insurance institutions must place great stress. The insurance fund management in China starts late, the building
up of basic systems lags behind, the mechanism of the internal control is weak, the phenomena of stressing investments and ignoring
internal control as well as stressing income and ignoring risks widely exist, and the operations breaking rules frequently occur.
Such facts have become serious potential threats to the insurance fund safety, and must be earnestly resolved.

The insurance fund management is the lifeline of preventing the insurance industry from risks, and is also an important content and
key link to intensify the whole industry’s risk management. Insurance institutions shall carefully implement “Some Opinions”, and
shall, from the overall and strategic height, unify their understanding and awareness, intensify risk consciousness, and promote
the sense of responsibility and sense of urgency in the improvement of the insurance fund risk management. They shall perfect the
bylaws, improve the mechanism, regulate the operation, intensify disclosure, evaluate the risks insurance fund management in a scientific
way by adopting new methods and using new means, and construct a new risk management system of all-round coverage whole-process management,
and all-staff participation gradually.

2.

Specifying the objective, fulfilling tasks, and establishing a new management system.

Within a period in future, insurance institutions shall place the building up and improvement of the system of insurance fund risk
management and the prevention of operational risks in insurance fund management on an important position of the management work,
and make them become a “roll booster” and “safety net” to promote the rapid development of the insurance industry.

The guiding ideology of improving insurance fund risk management: To implement the view of scientific development in an all-round
way according to the requirements of “Some Opinions”, and by regarding the maintenance of the immediate interests of insurance parties
as the fundamental task, regarding serving economic development and the whole society as the starting point, and regarding strengthening
the building up of capacities of managing insurance fund risk as the emphasis, continue strengthening the building up of basic systems,
propel the reform of management system, establish a management mechanism under which assets are matched with liabilities and risks
are matched with income, propel the mode of risk management to be converted from passively preventing into actively controlling,
and realize the fundamental transformation of the management mode of insurance funds steadily.

Working objective of strengthening insurance fund risk management: To set up a scientific philosophy of overall risk management, build
up a rigorous organizational system of risk management, improve the operation mechanism of risk management, further ameliorate techniques
of risk management, eliminate accumulated risks gradually, keep significant risks within limits effectively, construct a fund risk
management culture of insurance characteristic, establish brand advantages of insurance fund risk management, make risk management
on the use of insurance funds become insurance institutions’ important profit source, and continuously enhance the insurance industry’s
the core competitiveness.

Major tasks of propelling insurance fund risk management: To strengthen the institutional construction of corporate governance and
internal control, construct an organizational framework of risk management with clear duties, rational work division and balanced
powers, completely regulate the operation flow of the insurance fund management, and improve the significant emergency responding
mechanism of insurance fund management. To steadily carry out the trusteeship system of insurance funds, determine the basic duties
of the entrusting parties, entrusted parties, trustees and other parties of insurance funds as well as the legal relationships among
them. To further practice compatible management of assets and liabilities, improve the risk management methods, optimize the system
of information technology, strengthen the monitoring means of risk, and enhance the capacities of managing insurance fund risk. To
improve the investigation mechanism of liability, punish commercial bribes severely, enhance the managers’ quality, and prevent risks
of management and operation.

3.

Reforming the system, improving the mechanism, and constructing a risk management framework.

To improve the organizational framework is an important basis of strengthening insurance fund risk management. Insurance institutions
shall, according to their own development strategies, further straighten out the management relationships of insurance funds, optimize
the corporate governance structure, and construct a long-term effective mechanism for insurance fund risk management on the basis
of the principles of specialty and systematism.

Speeding up reforming the management system of assets. Insurance companies shall continue propelling professional management, improve
the operation mode, establish a system of concentrative fund management of uniform dispatchment, centralized utilization and full-process
monitoring, practically fulfill the duties of strategic asset allocation, investment monitoring and performance evaluation, etc.
They shall, in accordance with the related provisions of the state, sign trusteeship agreements with related commercial banks, clarify
both parties’ duties, entrust banks to handle the affairs such as trusteeship of assets, clearing, delivery, asset valuation, and
investment supervision, and so on, and steadily carry out the third-party trusteeship of insurance assets. Insurance asset management
companies shall actively introduce domestic and overseas strategic investors, improve corporate governance, strengthen the building
up of internal control, regulate the operation acts, prevent management risks by using international management experiences as reference,
and shall manage the trusteeship assets and improve management efficiency under laws, regulations and the contract.

Constructing a risk management organizational structure. Insurance institutions shall, in light of the “Guiding Opinions Concerning
the Regulation of Insurance Corporate Governance”, further clarify the duties of the board of directors, the board of supervisors
and the management staff, regulate the management procedures strictly, establish and improve a mechanism under which the power of
the management decision-making, operation and supervision of insurance funds are separated from and balanced by each other; they
shall strengthen the building up of board of directors, specify the board of directors’ final liabilities for the investment policies,
risk control and lawful management. They shall set up the independent director institution, intensify the duties of independent director,
reinforce the board of directors’ independence, and improve the scientificalness of the decisions; the board of directors shall establish
an internal investment decision-making committee and a risk management committee, with the investment decision-making committee mainly
bearing the responsibility of ratifying the strategic asset allocation and the investment strategies and determining significant
investment matters, and with the risk management committee mainly bearing responsibilities of ratifying risk management bylaws and
basic strategies, and of supervising and evaluating the implementation of risk management. The board of supervisors shall supervise
the fund management acts of the board of directors and the management staff in accordance with the laws, administrative regulations
and relevant provisions of CIRC.

Each insurance company shall set up a professional management support system, establish a special asset management department to be
responsible for drafting asset management policies and adjusting strategic asset allocation, working out investment management guidelines,
select a professional management institution on the basis of the market-based principle, and establish an assessment mechanism of
the professional management institution’s performance. Each insurance fund management corporation shall establish an independent
risk management department to be responsible for drafting risk management bylaws, identifying, evaluating, controlling and managing
various risks, and regularly reporting the risk management situation.

Each insurance asset management corporation shall set up a chief executive officer in charge of the risk management to report the
related information to the board of directors regularly, prevent and eliminate significant risks in a timely manner. As to any significant
potential risk threat, he shall report to the insurance regulatory authority in a timely manner. The chief executive officer in charge
of the risk management shall not hold the position of chief executive officer in charge of the investment management or the senior
manager in charge of investment management concurrently. The employment and change of the chief executive officer in charge of the
risk management shall be reported to CIRC.

4.

Strengthening internal control, detailing the flow, and regulating risk management acts.

To intensify internal control of companies is an important measure to strengthen insurance fund risk management. The insurance institutions
at all level shall build up the guiding ideology of “giving priority to internal control” firmly, work out fixed rules, operate the
business under laws and rules, rigidify financial and accounting disciplines, and prevent risks of fund management.

Strengthening the building up of the internal control system. Insurance institutions shall proceed with compatibility of responsibilities,
decision making of investment, implementation of orders, transaction operation, management and control of risks, and information
disclosure, etc., completely amend and improve internal rules and bylaws, intensify advance prevention, in-process monitoring and
post-affair management, regularly inspect and evaluate the implementation of the internal control bylaws, and exert the supervisory
functions of internal and external audit, so as to ensure the independence, validity and continuity of the audit work on the basis
of the principles of “clearly dividing the work duties, being independent and balanced”.

Detailing the investment operation flow. Insurance institutions shall work out the operation flow of fund management, clarify each
link of the flow, the way of connecting related positions and the operational standards, so as to make it cover the whole process
containing research, decision-making, trading, clearing, risk control and performance evaluation. They shall clean up and disclose
the significant asset management risks, divide the positional duties of the front office, middle office and back office of investment
business strictly, work out effective measures for preventing and controlling risks, so as to make the risk evaluation conducted
before the investment trading. All staff members must lawfully operate, and not violate the procedures.

Establishing a responding mechanism of management emergency. Each insurance institution shall carefully implement the “Provisions
for the Insurance Industry to Respond to Significant Emergencies”, set up a emergency responding plan system of significant insurance
fund management , and shall, once finding any risk symptom or significant incident which might cause fund losses, immediately start
up the emergency responding mechanism, control the development of the state of affairs, make a report to the management staff in
a timely manner, urge the related department to make a rectification as soon as possible, and make a report to CIRC to specifically
state the incident’s background, the disposal situation and the possible consequences.

5.

Improving technologies, developing the system, and enhancing risk management capacities.

To improve techniques of risk management is an important measure to enhance insurance fund risk management. Insurance institutions
shall, according to their own situation, speed up introducing techniques of risk management and experiences of mature markets, carry
out the management of compatible assets and liabilities, improve the technical support system, and propel the transformation of the
risk management from qualitative management into the combination of qualitative management and quantitative management.

Implementing the asset-liability management. Insurance companies shall set up a management mechanism of compatible assets and liabilities,
improve the management system of insurance products by special asset accounts, and determine the best asset management combination
based on the insurance products’ different liability features. Insurance companies and insurance asset management corporations shall
intensify the linkup of investment products with insurance products, and set up a mechanism for coordinative operation of product
design, market sale and investment management. Insurance asset management corporations shall participate in the early design of insurance
products, exert asset management specialties and know about the other markets’ advantages, as well as assist insurance companies
in developing new-type insurance products, and further prevent pricing risks of insurance products. They shall lay stress on tactical
allocation and combined management to manage the entrusted assets elaborately, and practically prevent the risk of wrong allocation
of assets, according to the requirements of strategic allocation of insurance assets strictly.

Improving techniques of risk management. Insurance institutions shall use effective management methods of risks actively, establish
scientific monitoring indices of risks, by making use of such instruments as risk value, scenario analysis and stress testing, and
so on, to conduct the appraisal, pre-warning and monitoring of the policy risks, market risks, credit risks and liquidity risks of
investment management, so as to realize the early finding, reporting, controlling and resolving of the risks. They shall strictly
implement related laws and management provisions of and insurance fund, establish a risk budget system of fund management, reasonably
determine directions and proportions of investment, operate within the risk limits, and avoid being involved in great-risk investment
business or investment business beyond their own management or capacity of risk control.

Improving the management system of information. Insurance institutions shall gradually construct a sound management system of information,
strengthen the building up of the technology support system of information, regulate systematic development, operation and management,
and enhance the level of asset risk management. Each insurance institution shall establish an all-round risk management database,
collect and integrate the basic information on the insurance market and other markets, made a record of the original data of insurance
fund management and investment trading, solidify all factors of risk monitoring into related system of information technology, and
reduce human elements to a maximum extent to reduce operational risks.

6.

Clarifying duties, intensifying management, and rigidifying the mechanism for the liability investigation.

To strictly carry out the accountability system is an important guaranty for strengthening the insurance fund risk management. The
insurance institutions at each level shall lay great stress on educating employee and conducting occupational trainings, build up
the concept of lawful and complied management, and constantly improve all-level managers’ working quality and occupational morality.

Specifying the duties of the risk management. Insurance institutions shall, according to the principles of investing and bearing risks
independently, bear all liabilities in terms of fund management, risk control and investment operation, and so on. The regulatory
authorities shall strengthen the building up of basic systems, loose no time to work out the related rules, make a rigid market access,
regulate the operational acts, conscientiously perform supervisory duties, create a fair, just and open market environment in which
duties are clear, and set up an active, steady and orderly market order.

Conscientiously preventing moral risks. Insurance institutions shall set up management mechanisms for the observation, appraisal,
supervision and encouragement of investment managers, improve the system of report on work, and assess the operational performance,
management capacities, occupational ethics and behaviors of the managers within their service term, and the implementation of duties
thereof. Insurance institutions shall apply the post-leaving audit system to both senior asset managers and the staff members on
important positions strictly, implement the commitment system on combating commercial bribes, strictly prohibit establishing off-the-book
accounts privately, and shall not accept or pay commission in any name or in cash. The related fees lawfully charged for fund management
shall, according to the principles of publicity, transparency and lawfulness, be transferred through bank accounts, so as to earnestly
maintain the social images of honesty, credibility and legality of insurance institutions.

Establishing a mechanism for liability investigation. Insurance institutions shall regularly conduct supervision and inspections of
insurance fund risk management, find out and eliminate the weak points, fatal parts, and risks of major business and important persons
in a timely manner, endeavor to check incidents in violation of any law or rule, resolve the existing problems in a timely manner,
and report to CIRC.

Insurance institutions shall carefully implement the management policies of insurance funds, and severely punish the acts violating
any law or rule in light of the related laws and regulations. With regard to any matter violating any law or rule, no matter whether
causing any loss or not, they shall find out the cause completely, and investigate the liabilities of related persons and leaders
strictly. Senior managers of insurance institutions must be dismissed and replaced, instead of holding a position at the same level
at a different locality if they are involved in insider trading or other investment acts breaking rules, or shall be transferred
to the judicial organ and be subject to criminal liabilities under law if they have committed a crime.



 
China Insurance Regulatory Commission
2006-10-31

 






ANNOUNCEMENT ON THE MINISTRY OF COMMERCE, THE GENERAL ADMINISTRATION OF CUSTOMS, THE STATE ADMINISTRATION OF ENVIRONMENTAL PROTECTION ON ANNOUNCING THE CATALOGUE OF PROHIBITED COMMODITIES IN PROCESSING TRADE

Announcement on the Ministry of Commerce, the General Administration of Customs, the State Administration of Environmental Protection
on announcing the Catalogue of Prohibited Commodities in Processing Trade

[2006] No. 82

Pursuant to requirements as provided in the Circular of the Ministry of Finance, the National Development and Reform Commission, the
Ministry of Commerce, the General Administration of Customs, the State Administration of Taxation of the People’s Republic of China,
on Adjusting the Tax Refund Rate of Some Export Commodities and Supplementing the Catalogue of Prohibited Commodities in Processing
Trade (Cai Shui [2006] No. 139), the Ministry of Commerce, the General Administration of Customs and the State Environmental Protection
Administration formulated a catalogue of the new batch of prohibited commodities in processing trade (refer to the appendix), which
is now released. And the relevant matters are hereby announced as follows:

1.

The present announcement shall come into force as from November 22, 2006.

2.

The processing trade businesses approved by the competent commerce departments prior to November 22, 2006 shall be allowed to apply
to the customs for archival filing for the processing trade under relevant provisions, and shall be finished within the valid contractual
term; network supervision enterprises based on enterprises unit are allowed to finish the processing trade business prior to November
22, 2007. Where the above businesses are not done within the term, the term may not be postponed, and shall be dealt with under relevant
provisions on processing trade.

3.

In accordance with the Announcement ([2006] No.52) of the General Administration of Customs, the Ministry of Finance, the Ministry
of Commerce, the People’s Bank of China and the State Administration of Taxation, enterprises applying for domestic sales shall pay
tax delaying interests in accordance with the interest rate of the previous year as released by the People’s Bank of China of the
date as specified in the customs duty payment form.

4.

The present Announcement is applicable to such special supervisory areas as bonded areas and export processing zones. However, enterprises
established prior to the promulgation of the present announcement shall be excluded.

5.

The relevant provisions of the Announcement [2005] (No. 105) of the Ministry of Commerce and the General Administration of Customs
on Prohibiting the Processing Trade of Pesticide and Coal shall be terminated. Matters in respect thereof shall be governed by the
present Announcement. Other provisions of Announcement No. 105 shall remain valid.

The Catalogue of the new batch of prohibited commodities in processing trade shall be subject to the present Announcement, which will
be adjusted dynamically in accordance with relevant state policies.

Appendix: the Catalogue of Prohibited Commodities in Processing Trade

The Ministry of Commerce

The General Administration of Customs

The State Administration of Environmental Protection

November 1, 2006



 
Ministry of Commerce, General Administration of Customs, State Administration of Environmental Protection
2006-11-01

 






INTERIM MEASURES FOR THE ADMINISTRATION OF BOND LENDING AND BORROWING BUSINESS IN THE NATIONAL INTER-BANK BOND MARKET

Announcement of the People’s Bank of China

[2006] No.15

For the purpose of regulating the bond lending and borrowing business, safeguarding the legitimate rights and interests of market
participants, enhancing the market liquidity and improving the development of China’s bond market, the Interim Measures for the Administration
of Bond Lending and Borrowing Business in the National Inter-Bank Bond Market, which are formulated by the People’s Bank of China,
are hereby promulgated.

People’s Bank of China

November 2, 2006

Interim Measures for the Administration of Bond Lending and Borrowing Business in the National Inter-Bank Bond Market

Article 1

These Provisions are formulated according to the Law of the People’s Republic of China on the People’s Bank of China and the relevant
laws and administrative regulations for the purpose of regulating the bond lending and borrowing business directly performed among
the participants of national inter-bank bond market (hereinafter referred to as market participants), safeguarding the legitimate
rights and interests of market participants, enhancing market liquidity and improving the further development of bond market.

Article 2

Bond lending and borrowing business hereof referred to in these Measures is an act of bond accommodation that the bond receiver borrows
object bonds from the bond provider with pledge of certain quantity bonds, and simultaneously stipulate that the bond receiver shall
return the borrowed bonds and the bond provider shall return the pledge accordingly on a certain day in the future.

Article 3

All market participants may perform the bond lending and borrowing business.

Market participants shall, when engaging in the bond lending and borrowing business, abide by the principles of fairness, good faith
and undertaking risks by themselves, strengthen the corresponding management on internal authorization and external credit granting,
establish corresponding inner management system and operational procedure, and perfect the risk prevention mechanism.

Article 4

The object bonds in bond lending and borrowing shall be self-owned bonds by the bond provider and may be traded and circulated in
national inter-bank bond market.

Article 5

The term of bond lending and borrowing shall be determined by both parties of the lending and borrowing business through negotiation,
which shall not be more than 365 days at most.

Article 6

If the payment of interest on the object bonds occurred in the term of bond lending and borrowing, the bond receiver shall timely
return the interest of the object bonds to the bond provider.

Article 7

The receiver of bond lending and borrowing business shall pay fees for bond lending and borrowing to the provider, the standard of
charging rates shall be determined by both parties through negotiation.

Article 8

A market participant, when engaging in bond lending and borrowing business, may conclude a deal through the trading system of the
National Inter-Bank Funding Center (hereinafter referred to as Funding Center) or through telephone, fax and other methods. Where
the bond lending and borrowing business is not conducted through the Funding Center, both parties of the lending and borrowing business
shall register and filing at the local branch of the People’s Bank of China on the day when the deal is concluded, and send a copy
to the Funding Center at the same time. China Government Securities Depository Trust & Clearing Co. Ltd. (hereinafter referred
to as CDC) shall be in charge of the settlement of bond lending and borrowing. Both parties of the lending and borrowing business
shall send settlement instruction to the CDC on the day when the deal is concluded.

Article 9

Market participants, when engaging in bond lending and borrowing business, shall sign a lending and borrowing contract in written
form for each deal. The lending and borrowing contract shall stipulate specifically the name and quantity of the object bond, name
and quantity of the pledged bond, term of the bond lending and borrowing business, fees for bond lending and borrowing business,
replacement of pledged bond, payment of interest of the borrowed bonds during the lending and borrowing period and the solution of
dispute, and etc.

Article 10

When market participants engages in bond lending and borrowing business, the bond receiver shall provide full amount bonds to the
bond provider as pledge, and the pledged bonds shall be self-owned bonds that are entrusted to CDC for depository.

Article 11

The delivery of bond lending and borrowing shall be performed with object bonds When the time limit is due, however, it may be performed
with cash upon the negotiation and consent of both parties of the lending and borrowing business.

Article 12

Where the balance received by a single institution from bond lending and borrowing business exceeds 30% (including 30%) of the total
of its self-owned bonds entrusted or since the balance received from a single bond exceeds 15% (including 15%) of the quantity issued
of this bond, if every 5% increases, the said institution shall submit reports in written form to the Funding Center and CDC simultaneously
and explain the reasons.

Article 13

Where there is any breach of contract in a bond lending and borrowing business, both parties of the lending and borrowing business
may apply for arbitration or take legal proceedings at the people’s court in accordance with the stipulations in the contract, and
shall, before 12:00 of the next workday since the receipt of the final result of arbitration or litigation, submit the final result
to the Funding Center and CDC, the Funding Center and CDC shall make an announcement with respect to the result thereon on the day
when the final result is received.

Article 14

The Funding Center and CDC shall, in accordance with the provisions and authorizations of the People’s Bank of China, provide trading
and settling services for market participants engaging in bond lending and borrowing business, formulate corresponding rules about
the trading and settling of bond lending and borrowing business under these Provisions and implement the rules after reporting them
to the People’s Bank of China for filing.

Article 15

The Funding Center and CDC shall, pursuant to the provisions and authorizations of the People’s Bank of China, timely reveal the
relevant information on bond lending and borrowing to market participants, but may not divulge non-public information or mislead
the market participants.

Article 16

The Funding Center and CDC shall establish and perfect the corresponding risk monitoring system and pre-alert indicator system. The
Funding Center shall be in charge of the routine monitoring work on bond lending and borrowing trading, and CDC shall be responsible
for the routine monitoring work on bond lending and borrowing settling, they shall initiate the emergency mechanism where any unusual
circumstance is found and report to the People’s Bank of China.

The Funding Center and CDC shall submit the written report about the analysis of operation situation of bond lending and borrowing
business of the quarter within 10 workdays upon the end of each quarter.

Article 17

All branches of the People’s Bank of China shall enhance the communication with the Funding Center and CDC, and implement the routine
supervision and administration on the bond lending and borrowing business performed by market participants that come under their
jurisdiction.

Article 18

Where a market participant or the Funding Center or CDC violates these Provisions, it shall be penalized by the People’s Bank of
China subject to the provision of Article 46 of the Law of the People’s Republic of China on the People’s Bank of China.

Article 19

These Measures are subject to the interpretation of the People’s Bank of China.

Article 20

These Provisions shall enter into effect as of November 20, 2006.



 
People’s Bank of China
2006-11-02

 






CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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