SAFE Releases the Notice of the Penalty on the Wrong Doings of Some Banks

In order to safeguard our national economic and financial security as well as combat ‘hot money’, the State Administration of Foreign Exchange has been carrying out the special action of tackling and combating ‘hot money’ since February, 2010. The action aims at reinforce the attack against illegal cross-border capital flows without true or investment background trades.

SAFE mainly focuses on several essential businesses, including banking foreign exchange sale and purchase, short-term external debts, offshore financing, as well as the resources and utilization of foreign exchange fund in this special action. According to the results, foreign exchange compliance risk awareness and the overall running status of the appointed banks have improved with the continuous improvement of financial services. However, some banks value business expansion over compliant operation and failed to perform strict examine and verify on factuality, leaving an opportunity that can be utilized by 'hot money'. This action exerts negative influence on the balance of international payments and the development of economic and finance.

Appointed foreign exchange banks, as the main channel for operating foreign exchange business, are expected to hold scientific development values and be committed to social responsibilities as well as firmly observe foreign exchange regulations. Financial institutions are supposed to learn useful lessons from previous cases, strengthen internal management and operate businesses in accordance with law.

The SAFE will continuously concentrate efforts on improving financial services and facilitating the operation of the main market. In addition, the SAFE will also strengthen the supervision towards foreign exchange business and optimize the means of foreign exchange administration in order to ensure a sound development of economic and finance concerning foreign affairs.