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- Index number:
- 000014453-2019-0041
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- Dispatch date:
- 2010-11-01
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- Publish organization:
- State Administration of Foreign Exchange
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- Exchange Reference number：
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- Name：
- Circular of the SAFE on Imposing Penalties on Some Enterprises and Individuals that Carry Out Illegal Foreign Exchange Transactions
To maintain national economic and financial security and to crack down strongly on cross-border flows of hot money, since February 2010, the SAFE has launched special campaign to combat hot money. Careful inspections have been carried out of foreign exchange receipts and payments in foreign trade and settlement of foreign exchange by enterprises as well as foreign exchange settlement and sales by individuals. The inspections show that most enterprises and individuals have handled businesses such as foreign exchange receipts and payments and settlement and sales of foreign exchange in strict compliance with the relevant regulations for the administration of foreign exchange. However, some enterprises and individuals still carried out fake transactions or adopted deceptive means in violation of the regulations. They collected advances on sales based on fake transactions, conducted false settlements of foreign exchange for foreign investments, and some individuals carried out settlement and sales of foreign exchange by splitting large sums of money into smaller parts. Such violations have resulted in the inflow of hot money.Cases of the relevant violations and penalties on enterprises and individuals are hereby announced as follows:
In 2009, China Best Food Limited in Qingdao of Shandong province failed to declare its trading activities by classifying relevant activities into categories, such as processing with imported materials, transit trade, and general trade, when handling foreign exchange collections and payments for trade, resulting in 13 deals with incorrect declaration data involving a total of USD13.86 million. Such behavior was in violation of the relevant regulations on statistics and declaration of the balance of payments. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
During the period from January to September, 2008, Adani Industrial Co., Ltd. in Yingkou city of Liaoning province collected advances on sales totaling USD11.06 million. To date, the company has not carried out the verification and writing-off of the collection of foreign exchange from exports. An inspection revealed that the inflow of capital was based on fake transactions, which violated the relevant regulations on administration of the verification and writing-off of foreign exchange collections from exports. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
In December 2009, Wuzhou Property Development Limited in Huaian city of Jiangsu province handled settlement of foreign exchange in the amount of HKD155 million for foreign investment, with the declared purpose of payment for land use. However, an inspection revealed that RMB80 million of the funds was used to grant loans within the territory of China, which violated the relevant regulations on the administration of foreign exchange settlement for capital funds. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
During the period from February 2007 to December 2009, a company located outside the territory of China remitted 164 deals of funds into the personal saving accounts of 95 staff members of Unitera Garment Co., Ltd. in Yingkou city of Liaoning province, amounting to a total of USD5.89 million. The staff members settled the relevant exchange and then returned the funds in RMB to the company. The splitting of large sums of funds into small parts for foreign exchange settlement and sales by this company violated the relevant regulations on the administration of foreign exchange for individuals. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
During the period from January 2009 to April 2010, Ma, an individual within the territory of China, collected USD8.29 million from outside China in the name of his relatives and staff members of the company where he worked (146 people in total) and settled the exchange. Mas splitting the large sums of funds into small parts for settlement and sales violated the relevant regulations on the administration of foreign exchange for individuals. According to the Regulations, the SAFE rendered a decision to impose a fine on Ma as an administrative penalty.
In April and June 2009, Yuantian Investment Management Consulting Co., Ltd. in Dalian city of Liaoning province settled foreign exchange of RMB102 million for foreign investment by using a false contract, which violated the relevant regulations on the administration of foreign exchange settlement for capital funds. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
In July 2009, Hanshi Infrastructure Construction Co., Ltd. in Nantong city of Jiangsu province settled exchange for foreign investment for payment for construction. The settled funds of RMB27.8 million were transferred to the personal accounts of persons surnamed Ye, Chen, and others in Putian city of Fujian province. Such behavior violated the relevant regulations on the administration of foreign exchange settlement for capital funds. An inspection revealed that the above funds were actually remitted from an underground money shop outside of China. The company hoped to obtain qualifications as a foreign-invested entity based on the fake capital fund and then to return the settled funds to the underground money shop. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
In November 2009, Xiehe Wind Power Equipment Manufacture & Technical Service Co., Ltd. in Fuxin city of Liaoning province used RMB3.1 million acquired from the settlement of foreign investment capital for a subscription of new shares instead of normal production and operations. Such behavior violated the relevant regulations on the administration of foreign exchange settlement for capital funds. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
During the period from December 2009 to March 2010, Zhanfeng Trading Company in Changzhou city of Jiangsu province handled the settlement of foreign investment capital in the amount of USD9.85 million for payment for demolition compensation and for funds for land transfers. However, the company did not obtain the corresponding land-use rights. The settled funds in the amount of RMB57.18 million were transferred to the account of Yingkai Steel Trading Co., Ltd. in Suzhou of Jiangsu province. Such behavior violated the relevant regulations on the administration of foreign exchange settlement for capital funds. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
All market entities shall conscientiously establish an awareness of their social responsibility and operate in a prudent and scientific manner in strict compliance with the policies on foreign exchange administration. The penalized enterprises and individuals shall regard this as a warning and firmly establish an awareness of law-abiding operations. All other enterprises and individuals shall also draw lessons from the above-mentioned cases to strengthen their self-discipline and to operate their business in strict accordance with the law. The SAFE shall vigorously facilitate trade and investment and enhance a service-oriented awareness so as to meet the reasonable foreign exchange demands of enterprises and individuals. Furthermore, there will be strengthened efforts to supervise and inspect the foreign exchange business of market entities with respect to regulatory compliance and to crack down on the flow of hot money,thus safeguarding the foreign-related economic and financial security of the state.
November 1, 2010
