March 30, 2007 - The SAFE recently held a Briefing Meeting on Inspection of Designated Foreign Exchange Banks in Dongguan , Guangdong . Attendees included representatives from 19 Chinese banks, including the China Development Bank,  Export-Import Bank of China, Agricultural Development Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank, as well as ten foreign-funded banks, including Standard Chartered Bank, Mizuho Corporate Bank, Bank of East Asia, KBC Bank N.V., and United Overseas Bank. Deputy Administrator Deng Xianhong attended the meeting and delivered a speech.

The meeting announced the inspection and punishment of designated foreign exchange banks by the administrative authorities in 2006. With the development of the foreign exchange market and improvement in its administration, designated banks are attaching increasing importance to the lawfulness of their operations and the majority conduct their business in accordance with the laws. However, some still violate the rules. The foreign exchange administrative departments inspected 2,027 sectors (including head offices, branches, and sub-branches) of 29 Chinese- and foreign-funded banks in 2006, and 265 sub-branches were discovered to be violating the regulations and accordingly were fined RMB 16 million. Illegal conduct included excessive short-term external debt, illegal sales and transfers of external debt capital, violating the regulations on the management of foreign exchange loans and guarantees, illegal management of the general position for the sale and purchase of foreign exchange, over-fluctuation in the nominal rate, unlawful handling of collections and sales, sales and payments of foreign exchange, violating regulations on the management of export verifications, etc. Acts that purposefully evaded the regulations, for instance handling foreign exchange business by dividing the amount, were also discovered.

The meeting pointed out that with the deepening of the foreign exchange structural reform, foreign exchange administration changed from pre-event examination and approval to post-event supervision and from direct supervision to indirect supervision. The designated foreign exchange banks play an increasingly important role in the administration. The meeting set forth the requirement that the banks balance their business development and lawful operations, strengthen internal management, improve their internal control system for each business, and improve the skills of their staff and the lawfulness of their businesses. The meeting also called for active cooperation and support in the coming special inspections of foreign exchange capital inflows and settlement and the foreign exchange collections and sales of the banks, e.g., preparing materials and data, timely reporting existing problems, and assisting inspectors with all the inspection work.

The briefing meeting strengthened communications between the foreign exchange administrative departments and the designated foreign exchange banks, which has played a positive role in promoting the sound development of the market and an equilibrium in the balance of payments. Attendees said that they would utilize this critical juncture to raise their overall economic sense, further improve their internal control system, strengthen the authenticity of the verification, enhance the level of the lawfulness of their practices, and guard against the risks of foreign exchange business.