The State Administration of Foreign Exchange website again notified 24 foreign exchange violation cases on May 4. These cases cover all types of entities under the supervision of SAFE, including financial institutions, enterprises and individuals, and the types of cases mainly focus on false transactions such as entrepot trade and Neibao Waidai.

In these reported cases, many business cases involve fictitious re-export trade background, the use of other companies or is a false, invalid bill of lading, foreign exchange. It is worth noting that in this notification, not only the outflow of funds, but also the inflow of funds in violation cases. For example, Lianyungang Yulong Agricultural Technology Co., Ltd. illegal settlement of foreign exchange, the company from July to September 2015, through the construction of false contracts for capital remittance and settlement of 4.89 million US dollars. This act violates Article 23 of the Regulations on Foreign Exchange Control and Article 9 of the Regulations on Foreign Exchange Control of Domestic Direct Investment by Foreign Investors, and constitutes an illegal settlement of foreign exchange. According to Article 41 of the Regulations on Foreign Exchange Control, a fine of RMB 980,000 was imposed.

From the bank's point of view, the cases of the notification are mainly focused on banks' illegal handling of domestic and foreign loan guarantees, re-export trade, settlement and sale of foreign exchange.

For example, the Industrial and Commercial Bank of China Tianjin Economic and Technological Development Zone branch illegal handling of Neibao Wai loan case is a typical illegal case. From December 2013 to January 2016, the Tianjin Economic and Technological Development Zone Branch of the Industrial and Commercial Bank of China, when handling the contract signing of the foreign loan under the domestic guarantee and the purchase and payment of foreign exchange under the contract, had obvious problems such as the contents of the loan usage message could not be identified, the letter of intention to extend the term did not reflect the use of funds under the guarantee, and the performance amount was greater than the loan amount. Failure to conduct due diligence and investigation on the use of funds under the guarantee, the use of funds and the relevant transaction background as required.

The above behavior of the bank is in violation of Article 12 and 28 of the Cross-border Guarantee Foreign Exchange Administration Regulations. According to Article 47 of the Regulations on Foreign Exchange Control, 670,000 yuan of illegal income was confiscated and a fine of 1.2 million yuan was imposed.

Safe said that since 2018, the State Administration of Foreign Exchange has thoroughly implemented the spirit of the 19th National Congress of the Communist Party of China and the work deployment of the Party Central Committee and The State Council, closely focused on the three tasks of serving the real economy, preventing and controlling financial risks, and deepening financial reform, strengthened the supervision of the foreign exchange market, strictly investigated and punished all kinds of illegal foreign exchange outflows and inflows in accordance with the law, and cracked down on false and deceptive transactions. We will maintain the sound operation of the foreign exchange market and effectively fight the battle to prevent and defuse financial risks.

Attached:

Notice of the State Administration of Foreign Exchange on foreign exchange Violations

Since 2018, the State Administration of Foreign Exchange has thoroughly implemented the spirit of the 19th National Congress of the CPC and the work arrangements of the CPC Central Committee and The State Council, focused on the three tasks of serving the real economy, preventing and controlling financial risks, and deepening financial reform, strengthened the supervision of the foreign exchange market, strictly investigated and punished all kinds of illegal foreign exchange outflows and inflows in accordance with the law, and cracked down on false and deceptive transactions. We will maintain the sound operation of the foreign exchange market and effectively fight the battle to prevent and defuse financial risks. According to the Regulations of the People's Republic of China on the Disclosure of Government Information (Decree No. 492 of The State Council) and other relevant provisions, some typical cases of foreign exchange violations are hereby notified as follows:

Case 1: Remittance evasion case of Tianjin Binhai Haitong Logistics Co., LTD

From January 2015 to January 2016, Tianjin Binhai Haitong Logistics Co., Ltd. made up the re-export trade background, used the ocean bills of lading that had been picked up by other companies, and paid 46.518 million US dollars in foreign exchange.

This act violates Article 12 and 14 of the Regulations on Foreign Exchange Control, constitutes an act of exchange evasion, seriously disturbs the order of the foreign exchange market, and has a huge amount and bad nature. According to Article 39 of the Regulations on Foreign Exchange Control, a fine of 11.05 million yuan was imposed.

Source: China Business News