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Sunday, December 10, 2006

Regulations of the People's Republic of China on the Administration of Foreign-invested Banks

Chapter I General Provisions
Article 1 The present regulations are formulated for the purpose of strengthening and improving the supervision and administration of foreign-invested banks and promoting the sound and stable operation of the banking industry so as to meet the demands arising from the work of opening to the outside world and economic development.
Article 2 The term "foreign-invested banks" as mentioned in the present Regulations refers to the following institutions which have been approved to be established to operate within the territory of the People's Republic of China in accordance with relevant laws and regulations of the People's Republic of China:
1. Solely foreign-invested banks established with sole investment of a foreign bank or joint investment of a foreign bank and other foreign financial institutions;
2. Chinese-foreign joint venture banks established jointly by foreign financial institutions and Chinese corporations and enterprises;
3. Branches of foreign banks; or
4. Representative offices of foreign banks.
The institutions listed in item 1 through item 3 in the preceding paragraph shall be hereinafter referred to as "foreign-invested bank business institutions".
Article 3 The term "foreign financial institutions" as mentioned in the present Regulations refers to financial institutions registered outside the territory of the People's Republic of China and approved or permitted by financial regulatory authorities in the countries or regions where they are located. The term "foreign banks" as mentioned in the present Regulations refers to commercial banks registered outside the territory of the People's Republic of China and approved or permitted by financial regulatory authorities in the countries or regions where they are located.
Article 4 Foreign-invested banks shall abide by the laws and regulations of the People's Republic of China and shall not do harm to the national interests, the social and public interests of the People's Republic of China. The normal activities and legitimate rights and interests of foreign-invested banks shall be protected by the laws of the People's Republic of China.
Article 5 The banking regulatory institution of the State Council and the dispatched institutions thereof (hereinafter referred to as the banking regulatory institution) shall be responsible for the supervision and administration of foreign-invested banks as well as their activities. Where any other laws or regulations otherwise prescribe that other regulatory departments or institutions shall be responsible for so doing,, the provisions thereof shall prevail.
Article 6 The banking regulatory institution of the State Council shall be responsible for the formulation of relevant measures of encouragement and guidance in accordance with the state regional economic development strategies and relevant policies, which shall come into force upon approval by the State Council.

Chapter II Establishment and Registration
Article 7 The establishment of foreign-invested banks and the branches thereof shall be subject to the examination and approval of the banking regulatory institution of the State Council.
Article 8 The minimum limit of registered capital for a solely foreign-invested bank or a Chinese-foreign joint venture bank shall be RMB 1 billion or convertible foreign currencies on a par with RMB 1 billion. The registered capital shall be the paid-in capital. The operating capital of a branch of a solely foreign-invested bank and a Chinese-foreign joint venture bank within the territory of the People's Republic of China as provided by its head office shall be no less than RMB100 million or convertible foreign currencies on a par with RMB100 million. The total operating capital of all branches as provided by the solely foreign-invested bank and the Chinese-foreign joint venture bank shall be no more than 60% of the total capital of the head offices thereof. The operating capital of a branch of a foreign bank as provided by its head office shall be no less than RMB200 million or convertible foreign currencies on a par with RMB200 million. The banking regulatory institution of the State Council may, in light of the business scope of business institutions of foreign-invested banks and the needs of prudent supervision, raise the minimum limit of registered capital or operating capital thereof and prescribe the proportion of Renminbi thereof.
Article 9 Shareholders of solely foreign-invested banks and Chinese-foreign joint venture banks to be established or foreign banks that are to establish branches or representative offices shall satisfy the conditions as follows:
1. Having sustainable capability of gaining profits and good credibility and no record of major violations of the laws and regulations;
2. Shareholders of the solely foreign-invested banks and foreign shareholders of Chinese-foreign joint venture banks to be established or foreign banks that are to establish branches or representative offices shall boast experiences of engaging in international financial businesses;
3. Having effective anti-money laundering systems;
4. Shareholders of the solely foreign-invested banks and foreign shareholders of Chinese-foreign joint venture banks to be established or foreign banks that are to establish branches or representative offices shall be subject to effective supervision by the financial regulatory authorities in the countries or regions where they are located from which they shall obtain approval for their applications; and
5. Other prudent conditions as prescribed by the banking regulatory institution of the State Council. The countries or regions where shareholders of the solely foreign-invested banks and foreign shareholders of Chinese-foreign joint venture banks to be established or foreign banks that are to establish branches or representative offices are located shall have complete financial supervision and administration systems and good regulatory cooperation systems established between the financial regulatory authorities thereof and the banking regulatory institution of the State Council.
Article 10 Shareholders of the solely foreign-invested banks to be established shall be financial institutions and the sole shareholder or the controlling shareholder thereof shall satisfy, in addition to the conditions as prescribed in Article 9 of the present Regulations, the following conditions:
1. A commercial bank;
2. Having a representative office within the territory of the People's Republic of China for at least two years;
3. With the total assets no less than US$10 billion at the end of the year before the establishment application is put forward; and
4. Having a capital adequacy ratio that is in accordance with the provisions of the financial regulatory authority in the country or region where it is located and the banking regulatory institution of the State Council.
Article 11 Shareholders of the Chinese-foreign joint venture banks to be established shall satisfy the conditions as prescribed in Article 9 of the present Regulations, and in addition, the sole shareholder or the controlling shareholder thereof shall be a financial institution and satisfy the following conditions:
1. A commercial bank;
2. Having a representative office established within the territory of People's Republic of China;
3. With the total assets no less than US$10 billion at the end of the year before the establishment application is put forward; and
4. Having a capital adequacy ratio that is in accordance with the provisions of the financial regulatory authority in the country or region where it is located and the banking regulatory institution of the State Council.
Article 12 Foreign banks that are to establish branches shall satisfy, in addition to the conditions as prescribed in Article 9 of the present Regulations, the following conditions:
1. With the total assets no less than US$20 billion at the end of the year before the establishment application is put forward;
2. Having a capital adequacy ratio that is in accordance with the provisions of the financial regulatory authority in the country or region where it is located and those of the banking regulatory institution of the State Council; and
3. Where it is the first time for a foreign bank to establish branches, it shall have a representative office established within the territory of the People's Republic of China for at least two years.
Article 13 Foreign banks that have established business institutions within the territory of the People's Republic of China shall not establish new representative offices other than the existing ones, exclusive of regions that are supposed to be in accordance with the state regional economic development strategies and related policies. Representative offices that have been converted into business institutions upon approval shall go through formalities for the cancellation of registration of the former representative offices under law.
Article 14 To establish a foreign-invested bank business institution, preparations for the establishment shall be first applied for, and the following application materials shall be submitted to the banking regulatory institution in the place where the institution is to be established:
1. An application form with the contents covering the name, site, registered capital or operating capital, types of business under application of the institution to be established;
2. A feasibility study report;
3. The draft articles of association of the solely foreign-invested bank and the Chinese-foreign joint venture bank to be established;
4. The operating contract signed by and between shareholders of all parties of the solely foreign-invested bank and the Chinese-foreign joint venture bank to be established;
5. The articles of association of shareholders of the solely foreign-invested bank and the Chinese-foreign joint venture bank to be established or the articles of association of the foreign bank that is to establish branches;
6. Chart of the institutional structure of the shareholders of the solely foreign-invested bank and the Chinese-foreign joint venture bank to be established, the foreign bank that is to establish branches and the conglomerate to which they belong, name-list of major shareholders, overseas branches and name-list of affiliated enterprises;
7. The annual financial statements of the last three years of the shareholders of the solely foreign-invested bank and the Chinese-foreign joint venture bank to be established and the foreign bank that is to establish branches;
8. The anti-money laundering systems of the shareholders of the solely foreign-invested bank and the Chinese-foreign joint venture bank and the foreign bank that is to establish branches;
9. Copies of business licenses or copies of license documents on operating financial business issued by financial regulatory authorities in the countries or regions where the shareholders of the solely foreign-invested bank to be established, the foreign shareholders of the Chinese-foreign joint venture bank to be established and the foreign bank that is to establish branches are located together with the letter of opinions on the application; and
10. Other material as required by the banking regulatory institution of the State Council.
The banking regulatory institution in the place where the institution to be established is located shall submit the application materials together with opinions on the application to the banking regulatory institution of the State Council in a timely manner.
Article 15 The banking regulatory institution of the State Council shall make a decision on whether or not to approve the preparations for establishment within six months as of the day of receiving all the required application materials for establishing the foreign-invested bank business institution and shall inform the applicant in written form. Where the application is rejected, reasons shall be specified. Under special circumstances where the banking regulatory institution of the State Council fails to finish examination and make the decision on whether or not to approve the preparations for establishment within the period as previously prescribed, the period may be extended appropriately, and the applicant shall be informed in written form; however, the extended period shall not exceed 3 months. The applicant shall receive the application form for starting business from the banking regulatory institution in the place where the institution to be established is located.
Article 16 The applicant shall complete the preparations within 6 months as of the day of receiving the approval for preparing the establishment. Where the preparations fail to be finished within the prescribed period, reasons shall be specified and the period may be extended for 3 months upon the approval of the banking regulatory institution in the place where the institution to be established is located. Where the preparation work can not be finished within the extended period, the decision made by the banking regulatory institution of the State Council on approving the preparations for establishment shall be invalidated automatically.
Article 17 As regards those who have completed the preparations for establishment upon acceptance, the applicant shall fill in the application form for starting the operation and submit it together with the following materials to the banking regulatory institution in the place where the institution to be established is located:
1. The name-list of the principals of the institution to be established and their resumes;
2. Letters of authorization for principals of the institution to be established;
3. Certification on verification of capital issued by a statutory capital verification agency;
4. Safety measures and materials of other facilities related to business;
5. Tax and liability guarantee of the foreign bank for its branch bank as in the case of applying for establishing a foreign branch bank; and
6. Other materials as required by the banking regulatory institution of the State Council.
The banking regulatory institution in the place where the institution to be established is located shall submit the application materials together with opinions after examination and approval to the banking regulatory institution of the State Council in a timely manner.
Article 18 The banking regulatory institution of the State Council shall make a decision on whether or not to approve the starting of operation within 2 months from the day of receiving all the required application materials for starting the operation and shall inform the applicant in written form. Where the application is approved, the financial transaction license shall be issued; where the application is not approved, reasons shall be specified.
Article 19 Where a foreign-invested bank business institution is established upon approval, the applicant shall make the registration with and draw the business license from the administration of industry and commerce based on the financial transaction license.
Article 20 To establish a foreign bank representative office, the following application materials shall be submitted to the banking regulatory institution in the place where the representative office to be established is located:
1. An application form with the contents covering the title and site of the representative office to be established;
2. A feasibility study report;
3. The articles of association of the applicant;
4. Chart of the institutional structure of the applicant and the conglomerate to which it belongs, name-list of major shareholders, overseas branches and name-list of affiliated enterprises;
5. Annual financial statements of the last three years of the applicant;
6. The anti-money laundering system of the applicant;
7. Copies of the identity card and the academic credentials, resume and report of negative records of the top representative of the representative office to be established;
8. Letter of authorization for the top representative of the representative office to be established;
9. Copies of business license or copies of license documents on operating financial business issued by the financial regulatory authority in the country or region where the applicant is located together with the letter of opinions on the application thereof; and
10. Other documents as required by the banking regulatory institution of the State Council.
The banking regulatory institution in the place where the representative office to be established is located shall submit the application materials together with opinions after examination and approval to the banking regulatory institution of the State Council in a timely manner.
Article 21 The banking regulatory institution of the State Council shall make a decision on whether or not to approve the establishment within six months as of the day of receiving all the required application materials for establishing a representative office of the foreign bank and shall inform the applicant in written form. Where the application is not approved, reasons shall be specified.
Article 22 Where a representative office is established upon approval, the applicant shall make the registration with and draw the registration certificate of industry and commerce from the administration of industry and commerce based on the approval documents.
Article 23 The materials indicated in Article 14, Article 17 and Article 20, except the annual financial statements, shall have a Chinese translation attached if they are written in a foreign language.
Article 24 In accordance with the principles of legitimacy, prudence and sustainable operation and upon approval by the banking regulatory institution of the State Council, the foreign bank may convert the branches it established within the territory of China into solely foreign-invested banks with its sole investment. The applicant hereof shall put forward application for establishing solely foreign-invested banks in accordance with the conditions for examination and approval, procedures and materials required by the banking regulatory institution of the State Council.
Article 25 Where the branches of a foreign bank are converted into solely foreign-invested banks with the sole investment of the head office thereof, the foreign bank may reserve one branch engaged in foreign exchange wholesale business within the prescribed time limit. The applicant hereof shall put forward applications for establishing solely foreign-invested banks in accordance with the qualifications for examination and approval, procedures and materials required by the banking regulatory institution of the State Council.
The term "foreign exchange wholesale business" as mentioned in the preceding paragraph refers to foreign exchange business with clients exclusive of individuals.
Article 26 The qualifications for appointment of directors, senior managerial personnel and the top representative shall be in accordance with the requirements regulated by the banking regulatory institution of the State Council and shall be examined and approved by it.
Article 27 The Foreign banks that are under any of the following circumstances shall, upon approval of the banking regulatory institution of the State Council, furnish application materials in accordance with relevant provisions and go through related registration with the administration of industry and commerce:
1. To modify registered capital or operating capital;
2. To modify the title, business premises or site of office of the institution;
3. To adjust the scope of business;
4. To modify or adjust the share proportion of shareholders;
5. To modify the articles of association; and
6. Other circumstances as regulated by the banking regulatory institution of the State Council.
Where the foreign-invested banks are to change directors, senior managerial personnel and the top representative, their qualifications for appointment shall be submitted to the banking regulatory institution of the State Council for examination and approval.
Article 28 Where shareholders are modified in solely foreign-invested banks and Chinese-foreign joint venture banks, the shareholders after modification shall satisfy the conditions for shareholders as prescribed in Article 9, Article 10 or Article 11 of the present Regulations.
Under special circumstances and upon the approval of the banking regulatory institution of the State Council, Item 2 of Article 10 or Item 2 of Article 11 of the present Regulations may not be applicable to the shareholders after modification.

Chapter III Scope of Business
Article 29 Solely foreign-invested banks and Chinese-foreign joint venture banks, in accordance with the scope of business approved by the banking regulatory institution of the State Council, may engage in the following foreign exchange business and Renminbi business in part or in whole:
1. Absorbing public deposits;
2. Issuing short-term, medium-term and long-term loans;
3. Handling the acceptance and discount of negotiable instruments;
4. Purchasing/sell government bonds, financial bonds and other foreign currency negotiable securities other than stocks;
5. Providing letter of credit service and guarantee;
6. Arranging settlement of both domestic and overseas accounts;
7. Purchasing/selling foreign exchanges per se or as agents;
8. Handling insurance business as agents;
9. Doing inter-bank lending and borrowing;
10. Running business of bank cards;
11. Providing safe-keeping services;
12. Providing services of credit rating and consulting; and
13. Other business approved by the banking regulatory institution of the State Council.
Solely foreign-invested banks and Chinese-foreign joint venture banks, upon approval of the People's Bank of China may run foreign exchange settlements and sales.
Article 30 Where the branches of solely foreign-invested banks and Chinese-foreign joint venture banks carry out business within the scope of authorization of the head offices, the liabilities shall be undertaken by the head offices thereof.
Article 31 The branches of foreign banks may, in accordance with the scope of business approved by the banking regulatory institution of the State Council, engage in the following foreign exchange business and Renminbi business in part or in whole and the Renminbi business with clients exclusive of citizens within territory of China:
1. Absorbing public deposits;
2. Issuing short-term, medium-term and long-term loans;
3. Handling the acceptance and discount of negotiable instruments;
4. Purchasing/ selling government bonds, financial bonds and other foreign currency negotiable securities other than stocks;
5. Providing letter of credit service and guarantee;
6. Arranging settlement of both domestic and overseas accounts;
7. Purchasing/selling foreign exchanges per se or as agents;
8. Handling insurance business as agents;
9. Doing inter-bank lending and borrowing;
10. Providing safe-keeping services;
11. Providing services of credit rating and consulting; and
12. Other business approved by the banking regulatory institution of the State Council.
Branches of foreign banks may absorb every fixed deposit no less than 1 million yuan from citizens within territory of China and, upon approval of the People's Bank of China, may engage in foreign exchange settlements and sales.
Article 32 The civil liabilities of the branches of foreign banks and affiliated agencies thereof shall be undertaken by the head offices.
Article 33 The representative offices of foreign banks may engage in liaison, market investigation, consulting and other non-business activities which are related to the business of the foreign banks they represent. The civil liabilities arising from the activities of the representative offices of foreign banks shall be undertaken by the foreign banks they represent.
Article 34 The foreign bank business institutions engaged in Renminbi business within the scope of business as prescribed in Article 29 or in Article 31 of the present Regulations shall be approved by the banking regulatory institution of the State Council and shall satisfy the conditions as follows:
1. Having practiced within the territory of the People's Republic of China for not less than 3 years before filling the application;
2. Having made profits for 2 successive years before filing the application; and
3. Other prudent conditions as prescribed by the banking regulatory institution of the State Council.
Where the branches of foreign banks are converted into solely foreign-invested banks with the sole investment of the head offices thereof, the periods as previously prescribed in Item 1 and Item 2 shall be calculated as of the day of establishing the branches of foreign banks.

Chapter IV Supervision and Administration
Article 35 Foreign bank business institutions shall, under relevant provisions, formulate business rules and principles thereof, establish and improve risk management and internal control system and thereby carry them out.
Article 36 Foreign bank business institutions shall abide by the state uniform accounting system and provisions on information disclosure as regulated by the banking regulatory institution of the State Council.
Article 37 Foreign bank business institutions shall raise foreign debts under relevant provisions of the state.
Article 38 Foreign bank business institutions shall determine the interest rates for deposits and loans and commission fees in accordance with relevant provisions.
Article 39 In handling deposits, foreign bank business institutions shall lodge deposit reserve funds in accordance with the relevant provisions as regulated by the People's Bank of China.
Article 40 Solely foreign-invested banks and Chinese-foreign joint venture banks shall abide by the provisions on the administration of the ratio of liabilities to assets as prescribed in Law of the People's Republic of China on Commercial Banks. Solely foreign-invested banks originating from branches of foreign banks with the sole investment of the head offices thereof, and solely foreign-invested banks and Chinese-foreign joint venture banks established before the implementation of the present Regulations, as in case of impropriate ratio of liabilities to assets that is against the provisions, shall, within the prescribed time limit, meet the requirements as regulated by the banking regulatory institution of the State Council which may require solely foreign-invested banks and Chinese-foreign joint venture banks with high risks but relatively weak risk management capabilities to raise the capital adequacy ratio.
Article 41 Foreign bank business institutions shall draw bad debts reserve funds in accordance with the provisions.
Article 42 Solely foreign-invested banks and Chinese-foreign joint venture banks shall abide by the provisions of the banking regulatory institution of the State Council related to the governing of corporations.
Article 43 Solely foreign-invested banks and Chinese-foreign joint venture banks shall abide by the provisions of the banking regulatory institution of the State Council related to affiliated transactions.
Article 44 Thirty percent of the operating capital of a foreign bank branch shall be in the form of interest-earning assets as designated by the banking regulatory institution of the State Council.
Article 45 The ratio of the proportion of Renminbi in the totality of operating capital and reserve of a foreign bank branch to the risk assets of Renminbi shall not be less than 8%.
The banking regulatory institution of the State Council may require branches of foreign banks with high risks but relatively weak risk management capabilities to raise the ratio as previously prescribed.
Article 46 A foreign bank branch shall ensure the fluidity of its assets. The ratio of the balance of liquid assets and the balance of liquid debts shall not be less than 25%.
Article 47 The balance of domestic and foreign currencies assets within territory of China of a foreign bank branch shall not less than the balance of domestic and foreign currencies liabilities within territory of China.
Article 48 A foreign bank with two or more branches within the territory of the People's Republic of China shall authorize only one branch to carry out unified management of the other branch (es). The banking regulatory institution of the State Council shall carry out amalgamated supervision and administration of branches established within the territory of the People's Republic of China by foreign banks.
Article 49 Foreign bank business institutions shall, in accordance with relevant regulations of the banking regulatory institution of the State Council, report the cross-border flow of large-sum capital and capital transfer to the local banking regulatory institution.
Article 50 The banking regulatory institution of the State Council may, in light of the risk circumstances of a foreign bank business institution, take such special regulatory measures as to suspend part of its business and to order it to replace the senior managerial personnel.
Article 51 Foreign bank business institutions shall engage accounting firms established within the territory of the People's Republic of China under law to audit the financial and accounting reports thereof and shall report to the local banking regulatory institution thereabout. Where the accounting firm is to be fired, reasons shall be specified.
Article 52 Foreign bank business institutions shall submit, in accordance with the provisions, the financial and accounting reports, financial and accounting statements and relevant materials to the banking regulatory institution.
The representative office of a foreign bank shall, in accordance with the provisions, submit materials to the banking regulatory institution.
Article 53 Foreign-invested banks shall subject themselves to the supervision and check conducted by the banking regulatory institution under law, and shall not refuse or hinder.
Article 54 Solely foreign-invested banks and Chinese-foreign joint venture banks shall establish independent internal control, risk management, finance and accounting and computer information management systems.
Article 55 The chairman of the board of directors, the senior managerial personnel of solely foreign-invested banks established by foreign banks within the territory of the People's Republic of China and the senior managerial personnel of branches of foreign banks engaged in foreign exchange wholesale business shall not mutually hold any post in each other' s company.
Article 56 Transactions between solely foreign-invested banks established by foreign banks within the territory of the People's Republic of China and branches of foreign banks engaged in foreign exchange wholesale business shall be in accordance with commercial principles, and the trading terms and conditions shall not be more preferential than those of the transactions conducted with non-affiliated parties. Foreign banks shall tender full guarantee for the capital transactions between solely foreign-invested banks they established within the territory of the People's Republic of China and branches of foreign banks engaged in foreign exchange wholesale business.
Article 57 The representative office and the workers and staff thereof shall not engage in any form of business activities.

Chapter V Termination and Liquidation
Article 58 Where a foreign bank business institution terminates its operation by itself, it shall file a written application with the banking regulatory institution of the State Council 30 days in advance of the date of termination and shall dissolve or shut down and carry out liquidation upon examination and approval.
Article 59 Where a foreign bank business institution has become insolvent, the banking regulatory institution of the State Council shall order it to suspend operation and take stock within a prescribed limit of time. If it has restored its solvency during the period of stock-taking and needs to restore operation, it shall file an application to the banking regulatory institution of the State Council. If it has failed to restore its solvency after the prescribed time limit expires, it shall carry out liquidation.
Article 60 Where a foreign bank business institution has terminated its operation due to dissolution, shut-down, cancellation or bankruptcy under law, the specific matters concerning liquidation shall be handled in accordance with relevant laws and regulations of the People's Republic of China.
Article 61 After the termination of liquidation, a foreign bank business institution shall go through the cancellation registration procedures with the original registry within the time limit as prescribed by law.
Article 62 Where a representative office of a foreign bank automatically terminates its operation, it shall be shut down upon examination and approval of the banking regulatory institution of the State Council and go through the cancellation registration procedures with the original registry within the time limit as prescribed by law.

Chapter VI Legal Liabilities
Article 63 Where a foreign-invested bank is established without the approval of the banking regulatory institution of the State Council, or anyone that illegally conducts banking financial institution business, the banking regulatory institution of the State Council shall ban its operation and not accept its application for establishing foreign-invested banks within 5 years as of the day of the ban. Where a crime is constituted, the criminal responsibilities shall be born. Where no crime is constituted, the banking regulatory institution of the State Council shall confiscate the illegal gains and impose a fine of not less than the same amount of but not more than 5 times the illegal gains if the illegal gains are no less than 500,000 yuan. If there are no illegal gains or the illegal gains are less than 500,000 yuan, a fine of not less than 500,000 yuan but not more than 2, 000,000 yuan shall be imposed.
Article 64 Where a foreign-invested bank business institution is under any of the following circumstances, it shall be ordered to make corrections by the banking regulatory institution of the State Council. If there are illegal gains, the illegal gains shall be confiscated; if the amount of the illegal gains are not less than 500, 000 yuan, a fine of not less than the same amount of but not more than 5 times of the amount of the illegal gains shall be imposed; if there are no illegal gains or the illegal gains are less than 500, 000 yuan, a fine of 500, 000 up to 2, 000, 000 yuan shall be imposed. If the circumstance is extremely serious, or if it fails to make corrections within the time limit, the banking regulatory institution of the State Council may order it to suspend its operation for rectification or revoke its financial transaction license; if any crime is constituted, it shall be subject to the criminal liabilities according to law:
1. Establishing a branch without approval;
2. Making modification or terminating without approval;
3. Engaging in unapproved business activities in violation of the provisions; or
4. Raising or lowering the interest rate of deposits and loans in violation of the provisions.
Article 65 Where a foreign-invested bank is under any of the following circumstances, it shall be ordered to make corrections by the banking regulatory institution of the State Council, and shall be imposed on a fine of 200, 000 up to 500, 000 yuan; if the circumstance is extremely serious, or if it fails to make corrections within the prescribed time limit, the banking regulatory institution of the State Council may order it to suspend its operation for rectification or revoke its financial transaction license; if any crime is constituted, it shall be subject to criminal liabilities in accordance with the law:
1. Failing to disclose the information as required;
2. Refusing or hindering the supervision and check conducted by the banking regulatory institution under law;
3. Providing false financial and accounting reports, statements and relevant materials or providing financial and accounting reports, statements and relevant materials without disclosing material facts;
4. Concealing or destroy documents, certificates, account books, electronic data or other relevant materials as are necessary for the supervision and check;
5. Appointing directors, senior managerial personnel and top representatives without undergoing qualification examination; or
6. Refusing to implement the special measures for supervision and administration as prescribed in Article 50 of the present Regulations.
Article 66 Where a foreign-invested bank business institution, in violation of the relevant provisions of the present Regulations, fails to submit the financial and accounting report, statements and the relevant materials within the prescribed period, or fails to formulate the relevant operation rules, establish and perfect the relevant management systems in accordance with the provisions, the banking regulatory institution of the State Council shall order it to make corrections within a prescribed period, and as regards those who fail to make corrections within the prescribed period, it shall impose a fine of not less than 100,000 yuan but not more than 300,000 yuan.
Article 67 Where a foreign-invested bank business institution engages in business activities in violation of the relevant provisions in Chapter Ⅳ of the present Regulations or in serious violation of the prudent operation rules, the banking regulatory institution of the State Council shall order it to make corrections with a fine of not less than 200,000 yuan but not more than 500,000 yuan. Where the case is extremely serious or no corrections are made within the prescribed time limit, the banking regulatory institution of the State Council shall order it to suspend its operation for rectification or revoke its financial transaction license.
Article 68 Where a foreign-invested bank business institution is in violation of the provisions of the present Regulations, the banking regulatory institution of the State Council, in addition to punishing it in accordance with Articles 63 through 67 of the present Regulations, shall take the following measures in light of different circumstances:
1. To order the foreign-invested bank business institution to replace the direct liable directors, senior managerial personnel and other liable persons;
2. If the offences of the foreign-invested bank business institution constitute no crime, the direct liable directors, senior managerial personnel and other direct liable persons shall be given a warning, and be imposed on a fine of 50, 000 up to 500, 000 yuan; or
3. To disqualify the direct liable directors, senior managerial personnel from taking the positions for a certain time period to even a life-long period, to prohibit the direct liable directors, senior managerial personnel and other direct liable persons from engaging in banking operations for a certain time period to even a life-long period within the territory of the People's Republic of China.
Article 69 Where a representative office of a foreign bank engages in business activities in violation of the provisions of the present Regulations, it shall be ordered to make corrections and given a warning by the banking regulatory institution of the State Council. If there are illegal gains, the illegal gains shall be confiscated; if the amount of the illegal gains is not less than 500, 000 yuan, a fine of not less than the same amount of but not more than 5 times of the amount of the illegal gains shall be imposed; if there are no illegal gains or the illegal gains are less than 500, 000 yuan, a fine of 500, 000 up to 2, 000, 000 yuan shall be imposed. If the circumstance is serious, the banking regulatory institution of the State Council shall revoke the representative office; if any crime is constituted, it shall be subject to the criminal liabilities in accordance with the law.
Article 70 Where a representative office of a foreign bank is under any of the following circumstances, the banking regulatory institution of the State Council shall order it to make corrections, give it a warning and impose a fine of not less than 100, 000 yuan but not more than 300, 000 yuan. Where the circumstance is serious, the banking regulatory institution of the State Council shall disqualify the top representative from taking the positions for a certain time period or require the foreign bank she or he represents to replace the top representative. Where the circumstance is extremely serious, the banking regulatory institution of the State Council shall revoke the representative office:
1. Modifying the site of office without approval;
2. Failing to submit materials to the banking regulatory institution of the State Council in accordance with the provisions; or
3. In violation of the present Regulations or other provisions of the banking regulatory institution of the State Council.
Article 71 Where a foreign-invested bank violates other laws and regulations of the People's Republic of China, it shall be dealt with by related competent authorities in accordance with the law.

Chapter VII Supplementary Provisions
Article 72 The present Regulations shall apply to banking institutions established by financial institutions from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan within the territory of China. Where the State Council otherwise regulates, the provisions thereof shall prevail.
Article 73 The present Regulations shall come into force as of December 11, 2006. The Regulations of the People's Republic of China on the Administration of Financial Institutions with Foreign Investment as promulgated by the State Council on December 20, 2001 shall be abolished simultaneously.


The State Council of the People's Republic of China 2006-11-11
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