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China to Impose New FX Monitoring Programme

China’s State Administration for Foreign
Exchange (SAFE) says it will reform its monitoring process for individual
foreign exchange transactions from January 1, 2016.

At a media conference in Beijing, Du Peng, director of the Current Account
Management Department at SAFE, told reporters the authority that the new system
will build efficiencies by automating the inputting of information banks have
to supply when a customer does a trade. “
The launch of the system will significantly
simplify banks’ work,” Peng said.

Peng added that while maintaining the function of collecting statistics on
individual sales and settlement of foreign exchange, the new system will now
have functions of ‘foreign exchange receipts and payments’ and ‘banknote
deposits and withdrawals’. “This means that this system will collect and
monitor all the data involved in individual foreign exchange business,
including sales and settlement of foreign exchange, foreign-related receipts
and payments, and deposits and withdrawals of banknotes,” he explained.

The new system will underscore the management and offsite monitoring
analysis of SAFE’s “watch list”, which monitors the actions of a group of
individuals to ensure they adhere to the rules. In the past, such a watch list
for individuals was made by a single bank based on the standards for split
settlement and sales of foreign exchange issued by SAFE, and not applicable to
all banks across the country. After the launch of the new system, these data
will be acquired, analysed and disseminated nationwide by SAFE in a centralised
manner. “In the future, when an individual goes to a bank for sales and
settlement of foreign exchange, the bank will be able to know whether this
individual is on the watch list of other banks or other regions,” Peng said.

“Overall, the launch of the new system will offer more convenience for
individuals and banks in relevant businesses, while the foreign exchange
administration policies for individuals remain unchanged,” he added.

Peng also noted that SAFE is monitoring and watching out for the adjustment
of the $50,000 quota on individuals for the sales and settlement of foreign
exchange. O”ur statistics show that more than 96% of foreign exchange purchases
by individuals are within $50,000, and the amount of foreign exchange purchases
per capita has been on the decline over the past two years, which justifies
that the $50,000 quota is enough to satisfy individuals’ demand for use of
foreign exchange,” he said. “On the other hand, there is actually no ceiling on
the sale and settlement of foreign exchange in the amount more than $50,000:
individuals are required to go through relevant procedures with a bank by
presenting their ID cards if the amount is below $50,000; if the amount is
higher than $50,000, individuals are also required to go through relevant
procedures with a bank by presenting relevant authenticity evidencing materials
with the transaction amount on them. In a word, individuals’ demand for use of
foreign exchange, if true, can be generally satisfied.”

Colin_lambert@profit-loss.com  Twitter @lamboPnL

Colin Lambert

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