State Administration of Foreign Exchange, Reforming the Mode of the Administration of Foreign Exchange Settlement of Capital Funds of Foreign Investment Circular

Issued: June 17 2002
Effective: July 1 2002
Applicability: For the purposes of the Circular, "capital funds of foreign investment" refers to the foreign exchange funds under the capital account of a foreign investment enterprise up to the limit approved by the State Administration of Foreign Exchange (SAFE) (Item Two).

Main contents: The reform provided in the Circular aims to replace case-by-case approval by SAFE branches and departments with direct verification by authorized banks in respect of foreign exchange settlement of capital funds of foreign investment. A bank that has maintained a good compliance record in its foreign exchange settlement and sale business for the last three years and has a sound internal control system in respect of foreign exchange settlement of capital funds may apply to the foreign exchange administration at the locality for authorization to handle direct foreign exchange settlement (Item Three). A Foreign Exchange Settlement of Capital Funds Operational Practice is attached to the Circular for authorized banks to implement (Item Six). Authorized banks are required to update the relevant foreign exchange administration on foreign exchange settlement transactions within the stipulated time limits (Item Seven). SAFE branches and departments shall conduct on-site inspection on authorized banks every six months (Item Eight).