Circular on Matters Relevant to Renminbi Settlement in Connection with Investment in Financial Institutions in China by Overseas Investors

2. When a settlement bank in China handles for an overseas investor matters related to a renminbi investment in a financial institution in China, it shall open renminbi settlement accounts for the overseas investor and the financial institution in China in accordance with provisions for the administration of bank settlement accounts such as the Measures for the Administration of Renminbi Bank Settlement Accounts and the Measures for the Administration of Renminbi Bank Settlement Accounts of Overseas Institutions (issued with document Yin Fa [2010] No.249). With the exception of the remittance by an overseas investor from China of renminbi denominated funds derived from a profit distribution, liquidation, capital reduction, shareholding divestment or early investment recovery, dedicated accounts shall be opened for relevant funds for other matters in accordance with the principle of the dedicated use of dedicated accounts.

3. When an overseas investor handles the inward remittance of overseas renminbi investment funds, if, in accordance with the pertinent administrative measures of the State Council's financial regulator, it is first necessary to undergo examination and approval and then have the funds verified, the capital verification shall be carried out by submitting relevant documentation, such as the approval document from the regulatory department, to the settlement bank in China. If it is first necessary to have the funds verified and then undergo examination and approval, the capital verification may first be carried out on the strength of duplicates of the application materials submitted to the regulatory department, and once the approval or record filing document is secured it shall then be submitted to the settlement bank. If approval is denied, the funds that were remitted inward shall be returned via the original route.

4. When an overseas investor wishes to remit from China the renminbi denominated profits it has obtained, the settlement bank in China may handle the same directly once it has reviewed relevant documentation such as the relevant profit disposal resolution of the foreign-funded financial institution and the proof of tax payment. When an overseas investor wishes to remit from China renminbi funds derived from a capital reduction, equity transfer, liquidation, early investment recovery, etc., the settlement bank in China shall carry out for it the procedures for the outward remittance of the renminbi funds once it has reviewed the approval or record filing document from the State Council's financial regulator and the proof of tax payment.

5. A settlement bank in China shall perform its information submission obligation, submitting information relating to the renminbi settlement accounts opened by foreign institutions pursuant hereto as well as information on the cross-border receipts and payments of renminbi funds handled through the aforementioned accounts to the renminbi cross-border receipt and payment information management system in a timely, accurate and complete manner.

6. When a settlement bank in China handles renminbi settlement in connection with an investment in a financial institution in China for an overseas investor, it shall duly perform its anti-money laundering and anti-terrorist financing obligations in accordance with the PRC Anti-money Laundering Law and relevant provisions of the People's Bank of China, so as to prevent the commission of illegal and criminal activities such as money laundering and terrorist financing by using renminbi settlement in connection with foreign direct investment.

7. The People's Bank of China and its (sub-)branches shall conduct onsite and offsite inspections in respect of the handling by settlement banks in China of the business activities of overseas investors relating to investments in financial institutions in China and procure the due performance by domestic settlement banks of duties such as the review of the genuineness of transactions, information submission and anti-money laundering.

The Shanghai Head Office, branches, business management departments, provincial capital central sub-branches and sub-provincial city central sub-branches of the People's Bank of China are requested to forward this Circular to commercial banks in their jurisdictions.