Monetary Policy

Circular of the SAFE on the Issuance of the Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs (Interim)

  【2014】No. 23
  Provincial, autonomous region, and municipal branches and Foreign Exchange Administration departments of the SAFE, and the Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo branches of the SAFE:
  To satisfy the requirements of MNCs to uniformly use foreign exchange funds both in China and in other countries, to serve the real economy, to promote trade and investment facilitation, to support industrial restructuring and upgrading, and to explore exchange facilitation for investment and financing, the State Administration of Foreign Exchange (SAFE) has developed the Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs (Interim) and is now issuing them to you for implementation.
  Regulations on the Centralized Operations and Management of the Foreign Exchange Funds of MNCs (Interim)
  Chapter 1 General Provisions
  Article 1 These Regulations are formulated for the purposes of promoting trade and investment facilitation and serving the real economy.
  Article 2 MNCs may, according to the requirements of their business operations, open a domestic master account for foreign exchange funds with a bank in their location, operate and manage the foreign exchange funds of domestic member enterprises in a centralized manner, and handle the centralized receipts and payments and the net settlement of the foreign exchange funds under the current account.
  Article 3 The MNCs may, according to the requirements of their business operations, open an overseas master account for foreign exchange funds with a bank in their location, operate and manage the funds of the overseas member enterprises in a centralized manner and the foreign loan funds borrowed from other overseas institutions.
  Dealings between the overseas master accounts for foreign exchange funds or the overseas master account and the domestic foreign exchange account of overseas institutions or overseas funds are free from control. Funds in the overseas master account for foreign exchange funds are not part of the enterprise’s foreign debt quota, but they shall undergo foreign debt registration pursuant to the relevant regulations.
  Domestic banks may utilize the deposits absorbed through the overseas master accounts for foreign exchange funds in China to the extent of 10% of the quota; and they may utilize the deposits absorbed through the overseas master accounts for foreign exchange funds exceeding 10% of the quota in China, provided that the balance of the quota for the short-term foreign debt is used.
  Article 4 Net funds raised between the domestic master account for foreign exchange funds and the overseas master account for foreign exchange funds shall not exceed the centralized foreign debt quota of the domestic member enterprises, and the net lent funds shall not exceed the centralized outward loan quota of the domestic member enterprises.
  Article 5 MNCs may, according to the requirements of their business operations, open domestic and overseas master accounts for foreign exchange funds at the same time, or they may choose to open either one of the two accounts.
  When domestic and overseas master accounts for foreign exchange funds are opened at the same time, the funds raised or lent through foreign debts and outward loans shall be handled through the overseas master account for foreign exchange funds; when only a domestic master account for foreign exchange funds is opened, the funds raised or lent through foreign debts and outward loans can flow to the account directly from overseas to the extent of the quota provided under Article 4; when only an overseas master account for foreign exchange funds is opened, the foreign debts and outward loans shall be transacted through the account.
  MNCs and banks shall control the quota in a proper manner and shall ensure that the funds raised or lent through the foreign debts and outward loans do not at any point in time exceed the provided quota.
  Article 6 The opening bank shall be a bank annually assessed as Category B or higher for implementing the regulations on foreign exchange administration during the recent three years. In principle, the host enterprise may choose not more than three domestic banks qualifying for foreign exchange settlements and sales as the opening banks for the centralized operation and management of the funds. The opening banks shall operate and manage the relevant account transactions pursuant to these Regulations.
  When the opening banks are assessed as lower than Category B (exclusive), after handling the transactions for the centralized operation and management of the funds, the banks may continue to handle the original relevant businesses.
  Chapter 2 Business Filings 
  Article 7 The MNCs may, according to the requirements of their business operations, open domestic and overseas master accounts for foreign exchange funds when the following conditions are satisfied:
  (I) They have real business requirements;
  (II) They have a sound structure and an internal control system for the management of foreign exchange funds; 
  (III) They have established the relevant electronic system for internal management;
  (IV) Foreign exchange receipts and payments exceed USD 100 million in the previous year (the aggregate amount of domestic member enterprises participating in the centralized operation and management of the foreign exchange funds);
  (V) They are free from significant violations of the laws and regulations on foreign exchange during the recent three years (for enterprises less than three years old, they are free from significant violations of the foreign exchange laws and regulations since their incorporation). For enterprises on the List of Enterprises Involved in Foreign Exchange Receipts and Payments for Trade, trade in goods shall be classified as Category A;
  (VI) Other conditions for prudent supervision as prescribed by the Foreign Exchange Administration are met. 
  Article 8 When opening domestic and overseas master accounts for foreign exchange funds, the host enterprise shall submit the following documents and information to the SAFE branches and the Foreign Exchange Administration Department (hereinafter referred to as the “Branch”) at its location for filing.
  (I) The application for filing shall include the basic information and business requirements of the MNCs, the basic information about the host enterprise, the name list and shareholding structure of the participating enterprises, and the certificate of authorization issued by the MNCs to the host enterprise. When choosing centralized receipts and payments and net settlements of the foreign exchange funds under the current account, the name list of the domestic and overseas member enterprises shall be provided in tabular form, including the name, organizational code, and registration address.
  (II) The relevant evidentiary materials shall include the business licenses of the host enterprise and of the domestic member enterprises stamped with the official seal of the host enterprise, the financial services permit, and the approval document for the business scope (applicable to finance companies); for overseas member enterprises, only the registration certificates are required. 
  (III) The business model, operating processes, internal control system, organizational structure, system construction, risk control measures, methods of data monitoring, and technical service support scheme jointly developed by the enterprises and the opening banks, the Confirmation on Conducting Centralized Operation and Management of the Foreign Exchange Funds of MNCs (see Appendix 1) duly signed, and the determination of the allocation of the quota of foreign debt and outward loans among the different opening banks provided that more than two (inclusive) opening banks are selected.
  (IV) Other documents as required by the Foreign Exchange Administration.
  Article 9 The host enterprise shall submit the following documents upon an initial application for a centralized quota of foreign debt:
  (I) The application shall specify, in tabular form, the name, organizational code, registration address of the member enterprises participating in the centralized quota of foreign debt, the foreign debt quota available for each member enterprise, the amount of foreign debt duly signed and registered, and the centralized quota for the foreign debt.
  (III) The unused quota of foreign debt, the list of foreign debt duly signed and registered, and the printing interface of the information on the inquiry list on the foreign debt business line in the capital account information system of the member enterprise participating in the centralized or partially centralized quota of the foreign debt.
  Special and sensitive industries are not allowed to participate in or to share the pooled quota of the foreign debt.
  Article 10 The Foreign Exchange Administration shall, within twenty working days upon submission of the complete documents for the filing application by the host enterprise, complete the filing procedures and issue the filing notice, which includes the quota of funds raised or lent through foreign debts and outward loans.
  Article 11 Where the host enterprise is a finance company, the enterprise shall abide by the relevant regulations of the relevant industrial authority, and separate the centralized operation and management of the foreign exchange funds of the MNCs from the other businesses (including their own asset and liability businesses) on the basis of the different accounts.
  Article 12 In the case of any change in the opening bank, the host enterprise, or the member enterprise during the course of handling the business, such change shall be filed with the Branch one month in advance.
  In the case of any change in the opening bank, the following documents shall be submitted:
  (I) The application for a change in the opening bank mainly includes the reason for the change, the planned selected opening bank, and the disposal of the original account balance;
  (II) The business model, operating processes, internal control system, organizational structure, system construction, risk control measures, methods of data monitoring, and technical service support scheme of the planned selected newly opening bank;
  (III) The balance statement stamped with the official business seal of the bank;
  (IV)The Confirmation on the Centralized Operation and Management of the Foreign Exchange Funds of the MNCs duly signed;
  (V) Other documents as required by the Foreign Exchange Administration.
  In the case of any change in the quota of the foreign debts and outward loans or in the type of business of the member enterprise or the host enterprise, a photocopy of the filing notice shall be submitted, in addition to the documents provided under Articles 8 and 9.
  Article 13 Where the trade in goods of the host enterprise is downgraded to Category B or Category C, the Foreign Exchange Administration shall, depending on the violations, notify the MNCs to change the host enterprise and to resubmit the application documents or to cancel the business qualifications of the host enterprise; Where the trade in goods of other member enterprises is downgraded to Category B or C, the host enterprise shall terminate the business of that member enterprise and change the filing of the member enterprise with the SAFE.
  Article 14 In the case of any violation of the foreign exchange regulations by the host enterprise, the business qualifications of the host enterprise shall be cancelled on the effective date of the penalty; in the case of violations of the foreign exchange regulations by a member enterprise, the business participation qualifications of the member enterprise shall be cancelled on the effective date of the penalty.
  Chapter 3 Management of Domestic and Overseas Master Accounts for Foreign Exchange Funds
  Article 15 The host enterprise shall take the filing notice to the bank to open domestic and/or overseas master account(s) for foreign exchange funds. The domestic and overseas master accounts for foreign exchange funds may be multi-currency accounts, allowing for daytime and overnight overdrafts. The funds from overdrafts can only be used for outward payments, and shall first be repaid after receipt of the foreign exchange funds. Sub-accounts can be opened under the master account according to the business operations requirements.
  The number of domestic and overseas master accounts opened is not subject to any limit, but shall meet prudent supervisory requirements.
  Article 16 The scope of receipts and payments through domestic master accounts for foreign exchange funds.
  (I) Scope of receipts
  1. Foreign exchange earnings under the current account obtained by domestic member enterprises directly from overseas;
  2. Transfers from foreign exchange accounts, capital funds accounts, assets realization accounts, special accounts for reinvestment, and accounts for foreign debt under the current accounts of domestic member enterprises;
  3. Foreign debt borrowed from overseas and transferred from the overseas master account for foreign exchange funds, and the principal and repaid interest on outward loans, subject to the prescribed quota;
  4. Deposits of foreign exchange purchases (funds obtained from foreign exchange purchases for outward payments under current accounts, outward loans, or repayment of foreign debts by foreign exchange purchases);
  5. The principal and interest on financial products;
  6. Other receipts as approved by the Foreign Exchange Administration.
  Where a MNC has not opened an overseas master account for foreign exchange funds, the scope of the receipts through the domestic master account for foreign exchange funds also includes foreign debt funds borrowed from overseas, subject to the quota prescribed, or the amount of the recovered principal and interest on the outward loans.
  Foreign exchange loans borrowed by MNCs from domestic depository financial institutions shall not be entered into the domestic master account for foreign exchange funds (except for foreign exchange loans for the repayment of foreign debts and outward loans).
  (II) Scope of payments
  1. Foreign exchange payments overseas under the current accounts by domestic member enterprises; 
  2. Transfers to the foreign exchange accounts, capital funds accounts, assets realization accounts, special accounts for reinvestment, and accounts for foreign debts under the current accounts of the domestic member enterprises;
  3. Outward loans transferred to the overseas master accounts for foreign exchange funds, subject to the prescribed quota, and the repaid principal and interest on the foreign debt;
  4. The foreign exchange settlement; 
  5. Transfers out of the principal of the financial products;
  6. Payments of the reserves against the foreign currency deposits;
  7. Other payments as approved by the Foreign Exchange Administration.
  Where a MNC has not opened an overseas master account for foreign exchange funds, the scope of the payments in the domestic master account for foreign exchange funds also includes outward loans, subject to the prescribed quota, and the repaid principal and interest on the foreign debt.
  Article 17 The centralized quota of the foreign debt of the MNCs = the foreign debt quota of the domestic member enterprises participating in the concentration – the amount of medium- and long-term foreign debt duly signed and registered by the domestic member enterprises participating in the concentration - the outstanding balance of short-term foreign debts registered by the domestic member enterprises participating in the concentration - the foreign debt quota set aside by the domestic member enterprises participating in the partial concentration.
  Article 18 The host enterprise may centralize, in whole or in part, the foreign debt quota of the domestic member enterprises.
  Where the host enterprise centralizes the whole foreign debt quota, the member enterprises cannot borrow foreign debt on their own upon the date of submission of the application. Where the foreign debt quota is centralized in part, the existing regulations on foreign exchange administration still apply to the balance of the foreign debt quota. The specific administration measures shall be formulated by consulting with the host enterprise and its opening bank after verification conducted by the Foreign Exchange Administration where the host enterprise is located and the involved Foreign exchange Administration. The involved Foreign Exchange Administration shall check the foreign debt data on a quarterly basis.
  Article 19 The foreign exchange funds financed from overseas by a host enterprise through the overseas master account for foreign exchange funds are subject to foreign debt registration. The foreign debt registration shall be completed by the different creditors and currencies, i.e., a debt granted by each overseas creditor in each currency shall be deemed by the enterprise as a separate foreign debt. In the event of businesses related to the withdrawal of foreign debt funds or the repayment of the principal and interest by the enterprise, the balance of the payment shall be declared accurately and the corresponding serial number of the business shall be entered accurately under the columns of “number of the certificate of approval by the Foreign Exchange Administration/serial number of the filing/serial number of the business.” The host enterprise shall, within fifteen working days upon the signing of the foreign debt contract and prior to the entry of the initial funds from the foreign debt, handle the procedures to register the contract with the Foreign Exchange Administration. Registration of a change in the foreign debt is subject to the existing regulations.
  Where a MNC has not opened an overseas master account for foreign exchange funds, the foreign debt funds borrowed through the domestic master account for foreign exchange funds are subject to the prescribed quota and to the provisions in the above paragraph.
  Article 20 Outward loans granted by MNCs are subject to the existing procedures for foreign exchange administration. Where the quota for outward loans exceeds 50% of the owner’s equity in the domestic member enterprise, the application can be submitted to the sub-branch, which shall make a decision in group discussions based on due process. 
  Article 21 Overseas receipts and payments under the current accounts and foreign exchange settlements and sales including centralized foreign exchange receipts and payments and net settlements of foreign exchange funds through the domestic master account for foreign exchange funds shall be handled by the host bank according to the principles of “knowing your customer,” “understanding your business,” and “due diligence.” Where the nature of the funds is ambiguous, the bank shall request that the host enterprise provide the relevant documents. Outward payments under trade in services are still subject to supplying the tax filing forms in accordance with the relevant regulations.
  The bank and the host enterprise shall keep the relevant documents for five years for future reference.
  Article 22 Foreign exchange settlements and sales under the current accounts, direct investments, foreign debts, and outward loans can be handled through the domestic master account for foreign exchange funds on a centralized basis.
  For foreign exchange funds under foreign direct investments (including foreign exchange capital and funds in the assets realization account and the domestic reinvestment account), and foreign debt funds as collected for the host enterprise by enterprises, the foreign exchange settlement can be made through the domestic master account for foreign exchange funds. The proceeds from foreign exchange settlements shall be transferred into the corresponding special RMB deposit account of the host enterprise (capital accounts – accounts for settled foreign exchange funds to be paid), and payments can be made directly within the business scope of each member enterprise and upon verification of their authenticity. The bank shall keep the relevant documents for five years for future reference.
  The enterprise and the opening bank shall report the data on the foreign exchange settlement and payment on a timely and accurate basis to the relevant business information system of the Foreign Exchange Administration. The bank shall report the account opening and closing, the receipts, payments, and balance of the special RMB deposit accounts in accordance with the requirements in Appendix 4 “Foreign Exchange Account Data Collection Rules (Version 1.1)” attached to the Circular of the State Administration of Foreign Exchange on the Pilot Capital Account Information System and the Reporting of the Relevant Data (HuifaNo.60 [2012]). The code for the nature of the account for a special RMB deposit account is “2113,” and the account nature is “capital accounts – account for foreign exchange funds settled and to be paid.” The bank shall report the receipts and payments between the special RMB deposit accounts and other domestic RMB accounts with the voucher for the domestic receipts and payments in accordance with the Circular of the State Administration of Foreign Exchange on Adjustments to Foreign-related Receipt and Payment Vouchers for Domestic Banks and Preparations for the Reporting of Relevant Information (Huifa No.49[2011]).
  Settlement of the foreign exchange funds under foreign direct investments and foreign debt funds shall be made in accordance with the purpose prescribed in the existing regulations on foreign exchange administration, but not for the following purposes:
  (I) Directly or indirectly used for payments outside of the scope of the business of the enterprise and specified purposes for foreign debt funds, or payments prohibited by national laws and regulations;
  (II) Directly or indirectly used for investments in securities and derivatives, unless otherwise specified in the bylaws and regulations;
  (III) Directly or indirectly used for granting RMB entrustment loans (excluding those permitted under the business scope), repayment of inter-enterprise loans (including third-party advances), and repayment of RMB bank loans transferred to a third party;
  (IV) Used for the payment of expenses related to the purchase of real estate not for self-use, except for foreign-invested real estate enterprises.
  Where the host enterprise is a finance company, the member enterprises may apply for the above-mentioned foreign exchange settlements and sales with the finance company, or the host enterprise may handle the foreign exchange settlements and sales with the bank on its behalf. Where the finance company handles the foreign exchange settlements and sales for the member enterprises and the company qualifies for foreign exchange settlements and sales, it shall report the data on the foreign exchange settlements and sales to the Foreign Exchange Administration in accordance with the regulations.
  Article 23 The opening bank or finance company shall report information on the overseas master account for foreign exchange funds (Code: 3600) and the domestic master account for foreign exchange funds (Code: 3601) to the Foreign Exchange Administration in accordance with the regulations.
  Article 24 Cross-border receipts and payments through domestic and overseas master accounts for foreign exchange funds shall be declared in accordance with the declaration requirements for the balance of payments with respect to cross-border receipts and payments in the Circular of the State Administration of Foreign Exchange on Printing and Distributing the Operating Rules on the Declaration of the Balance-of-Payments Statistics through Financial Institutions (Huifa No.22 [2010]). The receipts and payment of funds between domestic and overseas master accounts for foreign exchange funds and domestic non-residents shall be declared in accordance with the declaration requirements with respect to transactions between domestic residents and non-residents in the Circular of the State Administration of Foreign Exchange on Clarification and Adjustments of Issues Concerning the Declaration of the Balance-of-Payments Statistics (Huifa  No.34 [2011]). The balance-of-payments declaration with respect to the centralized receipts and payments and net settlements under the current accounts through a domestic master account for foreign exchange funds is subject to the provisions in Article 31 hereof.
  Article 25 The transfer of funds between the domestic and overseas master accounts for foreign exchange funds is not subject to the balance-of-payments declaration, but the relevant data shall be reported in accordance with the requirements with respect to fund transfers between domestic residents in the Circular of the State Administration of Foreign Exchange on Adjustments to Foreign-related Receipt and Payment Vouchers for Domestic Banks and Preparations for the Reporting of the Relevant Information (Huifa No.49 [2011]), the Circular of the State Administration of Foreign Exchange on the Use of Foreign-related Receipt and Payment Vouchers for Domestic Banks and Clarification of the Requirements for the Reporting of the Relevant Information (Huifa No.42 [2012]), and the Circular of the State Administration of Foreign Exchange on the Data Collection Rules for Foreign Exchange Business (Version 1.0) (Huifa No.18 [2014]).
  Article 26 Where the host enterprise is a finance company, the declaration is subject to the Circular of the Comprehensive Division of the State Administration of Foreign Exchange on Enhancing Declaration of External Assets and Liabilities and Profits and Losses of Financial Institutions and Upgrading the Reporting System (Huizongfa No.145 [2012]), and the Circular of the State Administration of Foreign Exchange on Printing and Distributing the Regulations on Statistics on External Assets and Liabilities and Transactions (Huifa No.43 [2013]). In that case, the funds of the overseas member enterprises under the centralized operation and management through the overseas master account for foreign exchange funds or funds borrowed from overseas shall be declared as external liabilities of the host enterprise.
  Chapter 4 Management of the Centralized Receipts and Payments and Net Settlements under the Current Accounts
  Article 27 The term “centralized foreign exchange receipts and payments” refers to centralized foreign exchange receipts and payments under the current accounts through the domestic master account for foreign exchange funds, handled by the host enterprise on behalf of domestic member enterprises.
  The term “net settlements” refers to the centralized accounting of funds receivable and payable in foreign exchange under the current accounts through the domestic master account for foreign exchange funds as handled by the host enterprise for its domestic member enterprises, and the consolidation of the foreign exchange receipts and payments for a certain period as one foreign exchange transaction. In principle, the net settlement shall not be less than one time during each calendar month.
  Article 28 In the case of centralized foreign exchange receipts and payments or net settlements under trade in goods, domestic member enterprises shall go through the registration procedures for “List of Enterprises Involved in Foreign Exchange Receipts and Payments for Trade” in accordance with the regulations (except for host enterprises as finance companies), and shall report the businesses, including the trade credit and trade financing, on a timely and accurate basis in accordance with the regulations on foreign exchange administration under trade in goods through the monitoring system (enterprise end) for foreign exchange transactions under trade in goods.
  Article 29 The host enterprise may purchase foreign exchange in advance and deposit it in the domestic master account for foreign exchange funds according to authentic and legitimate requirements for foreign exchange payments under imports of domestic member enterprises.
  Where the interval between the date of return of the foreign exchange and the original date of the receipt or payment is more than 180 days (exclusive), or where the foreign exchange funds cannot be returned through the original route due to special circumstances in accordance with the regulations, the host enterprise shall go through the registration procedures for foreign exchange transactions under trade in goods with the Foreign Exchange Administration and shall provide an application in written form, the original receipt/payment declaration documents, the original import/export contract, and the contract on the return of the foreign exchange. 
  Article 30 Pursuant to the Guidance on Foreign Exchange Administration under Trade in Goods and the detailed rules for implementation, the businesses of domestic member enterprises, which are subject to the Registration Form for Foreign Exchange under Trade in Goods, shall not enter into the centralized foreign exchange receipts and payments and net settlements, but shall be handled in accordance with the existing regulations.
  Article 31 The centralized receipts and payments or net settlements under the current accounts are subject to the balance-of-payments declaration requirements as follows:
  The host enterprise shall report two types of data, subject to the rules on the Declaration of the Balance-of-Payments Statistics, including: (1) the actual receipts and payments data of the host enterprise upon the centralized receipts and payments or net settlements (hereinafter referred to as the actual receipts and payments data); and (2) the data on the original receipts and payments of member enterprises prior to the centralized receipts and payments or net settlements as restored on a transaction-by-transaction basis (hereinafter referred to as the “restored data”).
  Where the actual receipts and payments data are not zero, the host enterprise shall make a declaration through the domestic bank handling the actual foreign receipts and payments, and the domestic bank shall mark the actual receipts and payments information code as “999999.” Where the actual receipts and payments data are zero (the result of the net settlements are zero), the host enterprise shall virtualize the declaration data of one transaction with the settlement result as zero, fill in the Application for Overseas Remittances, with both the payer and the payee as the host enterprise, the transaction code as “999998,” nationality as “China,” and the other required input information provided according to the circumstances, or as “N/A” (capital English letters). The domestic bank shall complete the actual reporting of the data before 12:00 noon of the first working day (T+1) immediately after the date of the actual foreign receipts and payments (net settlement date or accounting date when the result of the net settlements is zero) (T).
  When declaring restored data, the host enterprise shall determine the time of declaring the restored data (T) based on the date of the foreign receipts and payments (the net settlement date or the accounting date when the result of the net settlement is zero), and provide the bank actually handling or doing the book-keeping for the foreign receipts and payments with the basic information and the declaration information on the restored data according to the principle of full receipts and payments on behalf of the domestic member enterprises, including at least the information required for the declaration of the balance-of-payment statistics. The domestic bank shall complete the reporting of the basic information on the restored data before 12:00 noon of the first working day (T+1) immediately after the time of the restored date declaration (T), and shall complete the reporting of the declaration information of the restored data before 12:00 noon on the fifth working day (T+5).
  Whereas the serial number of the declaration form is compiled by the receiving/paying bank, the transaction code shall be filled in based on the nature of the actual transaction. The domestic bank shall indicate the “bank transaction number” for the restored data as the serial number of the declaration on the actual foreign receipts and payments data, so as to establish a correlation between the data on the centralized receipts and payments and the restored data. The domestic bank shall provide the host enterprise with the basic conditions, including the declaration channel, and will be responsible for conveying the basic information and the declaration information on the restored data to the Foreign Exchange Administration.
  Chapter 5 Supervision and Administration
  Article 32 The host enterprise shall operate its business in strict accordance with these Regulations and the filing notice of the Foreign Exchange Administration. In the case of any changes in the relevant items during the course of the business, a change in the filing shall be made on a timely basis with the Foreign Exchange Administration as require .
  The host enterprise and member enterprises shall declare to the bank the nature of the receipts and payments of cross-border funds and shall handle the declaration of the balance-of-payments statistics in strict accordance with the regulations. 
  Article 33 The opening bank shall verify the authenticity and compliance of the centralized operations and management of the foreign exchange funds of the MNCs and of the documents and information provided by the MNCs; carry out the registration and filing with respect to the relevant changes in the foreign exchange funds; and exercise monitoring, verification, and quota management of the flow of funds.
  Article 34 The opening bank shall, in accordance with the regulations and on a timely, complete, and accurate basis, report the information about the domestic and overseas master accounts for foreign exchange funds and the account for foreign exchange funds settled and to be paid, the data on the balance-of-payment declarations, domestic funds transfers, and foreign exchange settlements and sales, examine the data on the business reported by the enterprises, and coordinate off-site monitoring with the Foreign Exchange Administration. 
  Article 35 The sub-branch shall take the following measures to ensure the smooth and orderly centralized operation and management of the foreign exchange funds, and pragmatic implementation of the relevant policies:
  (I) The sub-branch shall improve the working mechanism, allocate a specific responsibility to a specific person, and report the data on a timely and accurate basis. The designated leading division and contact person are responsible for reporting to the SAFE. Within one year after implementation of these Regulations, information on the business and the relevant statistical statement shall be reported to the SAFE via the release of the documents prior to the 10th day of every month; the basic information, including the name list of the enterprises handling the centralized funds operation and management within the jurisdiction shall also be reported every quarter. After one year, monthly statistical statements shall be reported in the name of the Comprehensive Department; the basic information including the name list of the enterprises handling the operation and management of the centralized funds within jurisdiction shall be reported every quarter; information on the businesses shall be reported every half- year (see the relevant statement in Schedule 2-5)
  (II) The sub-branch shall enhance off-site monitoring and on-site verifications and examinations; make full use of the existing foreign exchange administration system, including platform monitoring and analysis of the flow of cross-border funds, establish the function of the name list for the MNCs, and perform comprehensive analysis of the data on foreign exchange receipts and payments, foreign exchange settlements and sales, funds transfers, centralized receipts and payments, and net settlements through domestic and overseas master accounts for foreign exchange funds.
  (III) The sub-branch shall perform risk warnings and window guidance for banks and enterprises and take effective measures to meet the demands of enterprises so as to establish step by step a reasonable pattern of two-way cross-border funds flow, urge the banks to formulate operating rules and an internal control system, and provide necessary technical service support. If necessary, it may request that the host enterprise perform a compliance audit on the centralized operation and management of the foreign exchange funds.
  (IV) The sub-branch shall, according to these Regulations and local conditions, formulate operational rules, including refining and implementing access conditions upon filing with the SAFE within due process. 
  Article 36 In the case of abnormal situations and violations that have been incurred by the enterprises, the sub-branch shall suspend or cancel the businesses within the scope prescribed hereunder, and impose an administrative penalty according to the Regulations on Foreign Exchange Administration and the relevant laws and regulations; in cases where violations of the principles of “knowing your customers,” “understanding your businesses,” and “due diligence” have been incurred by the opening banks, the sub-branch shall cancel the businesses within the scope prescribed hereunder and impose an administrative penalty according to the Regulations on Foreign Exchange Administration and the relevant laws and regulations.
  Chapter 6 Supplementary Provisions
  Article 37 The term “MNCs” in these Regulations refers to an enterprise entity consortium, with a capital relationship as a link, consisting of a parent company, subsidiaries, and other member enterprises or institutions (excluding financial institutions other than a finance company). 
  The term “member enterprises” refers to companies that qualify as independent legal entities within the MNCs, directly or indirectly holding shares of each other, which are classified as domestic member enterprises or overseas member enterprises.
  The term “host enterprise” refers to a MNC responsible for submitting applications, filing, implementing, and reporting information on the main businesses, or a domestic company authorized by the MNC and qualifying as an independent legal entity. When the host enterprise is a finance company, its cross-border fund transactions are subject to the regulations prescribed by the industry administrative department. 
  The domestic foreign exchange account of an overseas institution, as referred to in Paragraph 2, Article 3 hereof, includes the NRA account (Non-resident Account) opened by overseas institutions with a domestic bank, and the OSA account (Offshore Account) opened by an Offshore Banking Department qualified for offshore banking. 
  Article 38 If a single enterprise group has a sound internal control system with over USD 100 million in foreign exchange receipts and payments during the previous year and is free from significant violations of the laws and regulations on foreign exchange in the recent three years, the enterprise may, according to the actual operations of its business, apply for an independent domestic master account for foreign exchange funds, handle the net settlements under the current accounts, simplify the examination of the documents according to Article 21 hereof, and handle the procedures for foreign exchange settlements according to Paragraphs 2 and 3, Article 22 hereof; or may apply for an independent overseas master account for foreign exchange funds and exercise centralized management of overseas funds.
  Entrustment loans under the centralized foreign exchange operation and management framework of MNCs shall be subject to the regulations on domestic foreign exchange loans and do not need to open a physical foreign exchange account or conduct the relevant businesses through that account; the funds can be transferred directly between the member enterprises without the need to first transfer to the domestic master account for foreign exchange funds and then afterwards to the member enterprises. 
  Article 39 The Foreign Exchange Administration may gradually improve its policies based on national macro-control policies, trends in foreign exchange receipts and payments, and business operations.
  Article 40 These Regulations shall come into operation as of June 1, 2014, subject to interpretation by the State Administration of Foreign Exchange. At the same time, the Circular of the Comprehensive Division of the State Administration of Foreign Exchange on Issues Concerning Data Reporting on the Centralized Receipts and Payments by MNCs (Huizongfa No.47 [2013]) shall be abolished. MNCs carrying out centralized foreign exchange operation and management as approved by the Foreign Exchange Administration may continue to adopt the original centralized funds operation and management framework and policies, or may provide documents including the business requirements after the change (the documents already provided are not required) and may adopt these Regulations upon filing with the sub-branch.