Circular of the State Administration of Foreign Exchange on the Printing and Distributing of the Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs
Huifa No. 36 
The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government; the branches of the SAFE in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo:
To further facilitate trade and investment facilitation and serve the real economy, the State Administration of Foreign Exchange (SAFE) has revised the Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs (Interim). Relevant issues are notified as follows:
I. Pilot for Self-Disciplinary Management of External Debt Proportion. Member enterprises of an MNC will be subject to self-disciplinary management of external debt proportion when borrowing external debt and the host enterprise may centralize all or part of external debt quotas of its member enterprises; foreign exchange settled under external debt can be used to pay RMB loans or make equity investments in accordance with the laws.Upon registration of external debt, an enterprise can select the currency for repayment at its sole discretion according to its commercial principles.
II. The functions of overseas master accounts will be optimized. Domestic banks may utilize in China the deposits that are absorbed through the overseas master accounts for foreign exchange funds and which do not exceed 50% (inclusive) of the average daily deposit balance over the last six months; when included in banks' overall positions of foreign exchange settlement and sales for management, funds in an overseas master account can be used for foreign exchange settlement and sales at a certain proportion.
III. Account opening requirements will be simplified. MNCs will be allowed to operate the foreign exchange receipts of class-A member enterprises that do not need to be in the account for export income to be verified. A qualified host enterprise of an MNC will be allowed to open domestic and overseas master accounts for foreign exchange funds with non-local banks.
IV. Procedures for foreign exchange receipts and payments will be simplified. Banks will be allowed to verify the authenticity of relevant electronic documents and handle foreign exchange receipts and payments under the current account in the principle of "knowing your customer", "understanding your business" and "due diligence", while purchases and payments of foreign exchange for external payment under the current and capital accounts will be allowed to be processed with different banks.
V. Procedures for the declaration of foreign-related receipts and payments will be improved. Procedures for the declaration of the centralized receipts and payments of foreign exchange and the receipts and payments for net settlement will be simplified, and the way of declaration of the foreign-related receipts and payments that is fit for the automatic sweeping model of the cash pool will be established to allow banks to sign a package of sweeping agreements regarding foreign-related receipts and payments with enterprises.
VI. Ongoing and ex-post management will be strengthened. First, banks and enterprises are required to report accurate data such as pilot business data in time in accordance with regulations. Second, foreign exchange authorities should intensify monitoring of cross-border capital flows involved in the centralized operation and management of foreign exchange funds by MNCs, issue risk reminder notices in case of abnormalities or suspicious activities and conduct onsite verification and inspection in accordance with the laws. Third, the SAFE branches and foreign exchange administrative departments (the SAFE branches) can require a host enterprise to conduct a one-time update of the filing materials and redevelop operating rules for filing, or to file new businesses such as self-disciplinary management of external debt proportion alone. The SAFE branches are required to file with the SAFE pursuant to the above regulation and those that conduct new businesses should file the overall business operating rules with the SAFE. Fourth, when reviewing an enterprise' operating rules for filing, a SAFE branch must review the quotas of external debt and external loans, making sure they are accurate. The SAFE branches should ensure that systems run well to enhance cross-departmental coordination and regulation of banks and enterprises.
The revised Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs are now issued to you for implementation. Please be kindly noted that any special case should be reported to the SAFE.
010-68402113; 68402448; 68402381; 68402383
Appendix: Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs