Following the work plans of the CPC Central Committee and the State Council, the State Administration of Foreign Exchange (SAFE) was committed to clearing up market disorder, cracking down on violating behaviors and imposing strict penalties on foreign exchange irregularities in 2016. In accordance with the Regulations of the People’s Republic of China on the Disclosure of Government Information (Decree No. 492 of the State Council), the typical cases of enterprises and individuals violating foreign exchange regulations are notified as follows, in a bid to promote market players to raise their awareness of carrying out foreign exchange activities in compliance with regulations, and sustain the healthy and benign order in the foreign exchange market.

I. Cases of enterprises violating foreign exchange regulations

Case No. 1: Wuhan Yanzhi Property Management Co., Ltd. helped domestic individuals illegally transfer funds overseas under the guise of outbound investment

From September 2014 to December 2015, Wuhan Yanzhi Property Management Co., Ltd. illegally transferred funds overseas for domestic individuals many times under the guise of outbound investment. It charged 22 domestic individuals RMB 71.9249 million in total. Then it bought foreign exchange worth a total of RMB 67.3817 million in 23 transactions to help individuals illegally transfer the money overseas under the guise of outbound investment. The company obtained RMB 4.5432 million from the deals.

Such behavior violates Article 2 and 4 of the Regulations for Foreign Exchange Administration of Overseas Direct Investments by Domestic Institutions (Huifa No. 30 [2009]) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 3.369 million upon the company as an administrative penalty.

Case No. 2: Evasion of Foreign Exchange by Jiangxi Ganzhou Sichuang Trading Co., Ltd.

On April 2, 2015, Jiangxi Ganzhou Sichuang Trading Co., Ltd. applied to the bank for USD 9.6249 million in a working capital loan due within one year. Then the company counterfeited contracts and business invoices, altered the information on the bill of lading without permission, and even fabricated entrepot trade, based on which the company remitted all the loan to Hong Kong under "payments for entrepot trade".

This behavior violates Article 14 of the Regulations of the People's Republic of China on Foreign Exchange Administration, and Article 3 of the Guidance on Foreign Exchange Administration under Trade in Goods (Huifa No. 38 [2012]) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 650,000 upon the said company as an administrative penalty.

Case No. 3: Evasion of Foreign Exchange by Guangxi Qinzhou Yongjiashun Trading Co., Ltd.

Between June and July 2015, Guangxi Qinzhou Yongjiashun Trading Co., Ltd. handled payments of foreign exchange worth USD 10.3688 million in 11 transactions with a bank, by presenting its import contracts and the Customs list of entry records, and did so with another bank through repeated presentation of the same instruments.

This behavior violates Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration, and Article 3 of the Guidance on Foreign Exchange Administration under Trade in Goods (Huifa No. 38 [2012]) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 1.2996 million upon the said company as an administrative penalty.

Case No. 4: Evasion of Foreign Exchange by Shandong Longyang Chemical Co., Ltd.

Between June and August 2015, Shandong Longyang Chemical Co., Ltd. fabricated import deals many times. By counterfeiting or altering import contracts, invoices, bills of lading and Customs Declaration Forms of Imported Goods, the company handled 4 transactions for the payment of foreign exchange of USD 4.0765 million in total with 3 banks, thus illegally transferring the funds overseas.

This behavior violates Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration, and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 282,000 upon the said company as an administrative penalty.

II. Cases of individuals violating foreign exchange regulations

Case No. 1: A Mr. Wu illegally traded foreign exchange through underground banks

From March to December 2014, a Mr. Wu, native of Zhejiang, transferred a total of USD 30.4337 million for 118 times through an offshore account (OSA) it controlled to an offshore USD account controlled by an underground bank in accordance with the order of a Mr. Ji, owner of the underground bank, so as to obtain illegal interests.

Such behavior violates Article 32 of the Regulations for the Administration of Settlement and Sales of and Payment in Foreign Exchange (Yinfa No. 210 [1996]) and is considered illegal trading of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 2.125 million upon Mr. Wu as an administrative penalty.

Case No. 2: A Mr. Su evaded foreign exchange through split-out

Between July and August 2015, a Mr. Su, native of Tianjin, remitted RMB 11.8811 million in total into 39 individual accounts in a split-out way and purchased foreign exchange worth CAD 2.4675 million on an ATM using the bank cards of the 39 individuals. Later he remitted CAD 2.4675 million into a Hong Kong account he controlled using the ID cards and bank cards of the 39 individuals under study abroad, thus illegally transferring the money overseas.

Such behavior violates Article 7 of the Measures for the Administration of Individual Foreign Exchange (Decree No. 3 [2006] of the People's Bank of China) and Article 1 of the Circular of the State Administration of Foreign Exchange on Further Perfecting the Administration of Foreign Exchange Settlement and Sales for Individuals (Huifa No. 56 [2009]) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 120,000 upon Mr. Su as an administrative penalty.

Case No. 3: A Mr. Wang evaded foreign exchange through split-out

From July to August 2015, a Mr. Wang, native of Shanxi, transferred his funds into the accounts of 30 employees of his company，who then purchased foreign exchange under study abroad and remitted the money totaling the equivalent of USD 1.4463 million into Wang's overseas individual account in 30 transactions.

Such behavior violates Article 7 of the Measures for the Administration of Individual Foreign Exchange (Decree No. 3 [2006] of the People's Bank of China) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 90,000 upon Mr. Wang as an administrative penalty.

Case No. 4: A Mr. Huang illegally traded foreign exchange through an underground bank

On November 17, 2016, a Mr. Huang, native of Guangdong, contacted a Mr. Ruan, owner of an underground bank, to illegally exchange RMB for the equivalent of HKD 140,000 for overseas gambling.

Such behavior violates Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration and is considered illegal trading of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 25,000 upon Mr. Huang as an administrative penalty.