Chapter III Scope of Business

Chapter IV Supervision

Chapter V Termination and Liquidation

Chapter VI Legal Liability

Chapter VII Supplementary Provisions

Chapter I General Provisions

Article 1 These regulations are formulated for the purposes of meeting the needs of opening up to the outside world and economic development, strengthening and improving the supervision of foreign-funded banks, and promoting the safe and sound operation of the banking industry.

Article 2 The term "foreign-funded bank" in these regulations means any of the following institutions approved to be established 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) a wholly foreign-funded bank funded by a foreign bank on its own or jointly with any other foreign financial institution;

(2) a Chinese-foreign joint venture bank jointly funded by a foreign financial institution with a Chinese company or enterprise;

(3) a branch of a foreign bank

(4) a representative office of a foreign bank.

The institutions listed in subparagraphs (1) to (3) of the preceding paragraph are hereinafter referred to collectively as operational foreign-funded banks.

Article 3 The term "foreign financial institution" in these regulations means a financial institution that is registered outside the territory of the People's Republic of China and is approved or licensed by the financial regulatory authority of its home country or region.

The term "foreign bank" in these regulations means a commercial bank that is registered outside the territory of the People's Republic of China and is approved or licensed by the financial regulatory authority of its home country or region.

Article 4 A foreign-funded bank shall abide by the laws and regulations of the People's Republic of China, and shall not harm the national, social and public interests of the People's Republic of China.

The legitimate activities and lawful rights and interests of a foreign-funded bank shall be protected by the laws of the People's Republic of China.

Article 5 The banking regulatory agency of the State Council and its local offices (hereinafter referred collectively to as the banking regulatory agency) shall be responsible for the supervision of foreign-funded banks and their business activities. Where other supervisory departments or institutions that supervise foreign-funded banks and their business activities are specified in laws or regulations, such provisions shall prevail.

Article 6 The encouraging and guiding measures formulated by the banking regulatory agency of the State Council on the basis of the regional economic development strategy and other related policies of the State shall be implemented after submission to and approval by the State Council.

Chapter II Establishment and Registration

Article 7 Establishment of a foreign-funded bank and its branch shall be subject to examination and approval by the banking regulatory agency.

Article 8 The minimum registered capital for a wholly foreign-funded bank or a Chinese-foreign joint venture bank shall be 1 billion yuan (US$126.6 million) or an equivalent amount in convertible currencies. The registered capital shall be paid-in capital.

Where a wholly foreign-funded bank or a Chinese-foreign joint venture bank establishes a branch within the territory of the People's Republic of China, the branch shall receive from its parent bank a non-callable allocation of not less than 100 million yuan (US$12.7 million) or an equivalent amount in convertible currencies as its operating capital. The total amount of operating capital allocated from a wholly foreign-funded bank or a Chinese-foreign joint venture bank to all its branches shall be no more than 60 percent of the parent bank's aggregate capital.

A foreign bank branch shall receive from its parent bank a non-callable allocation of not less than 200 million yuan (US$23.3 million) or an equivalent amount in convertible currencies as its operating capital.

The banking regulatory agency of the State Council may, by taking into account the business scope of an operational foreign-funded bank and the need of prudential supervision, increase the minimum requirement on the above-mentioned registered capital or operating capital, and determine the RMB-denominated proportion of capital.

Article 9 The shareholder of a proposed wholly foreign-funded bank or a Chinese-foreign joint venture bank, and the foreign bank applying for establishing a branch or a representative office, shall satisfy the following requirements:

(1) having persistent profit earning capacity, good reputation, and no record of material violation of laws or regulations;

(2) the shareholder of a proposed wholly foreign-funded bank, the foreign shareholder of a proposed Chinese-foreign joint venture bank, and the foreign bank applying for establishing a branch or a representative office, shall have experience in international financial activities;

(3) having in place effective anti-money laundering systems;

(4) the shareholder of a proposed wholly foreign-funded bank, the foreign shareholder of a proposed Chinese-foreign joint venture bank, and the foreign bank applying for establishing a branch or a representative office shall be subject to effective supervision by the financial supervisory authority of its home country or region, and the application shall have been approved by the financial supervisory authority of its home country or region; and

(5) other prudential requirements prescribed by the banking regulatory agency of the State Council.

The home country or region of the shareholder of a proposed wholly foreign-funded bank, the foreign shareholder of a proposed Chinese-foreign joint venture bank, or the foreign bank applying for establishing a branch or a representative office shall maintain a sound financial regulatory system, and the financial supervisory authority of such country or region has well established a supervisory cooperation mechanism with the banking regulatory agency of the State Council.

Article 10 The shareholder of a proposed wholly foreign-funded bank shall be a financial institution and satisfy the requirements provided in article 9 of these regulations. In addition, the sole shareholder or the controlling shareholder of a proposed wholly foreign-funded bank shall satisfy the following requirements:

(1) being a commercial bank;

(2) having maintained a representative office within the territory of the People's Republic of China for over two years;

(3) having the total assets of not less than US$10 billion at the end of the year prior to the submission of the application; and

(4) having the capital adequacy ratio that meets the requirements prescribed by the financial supervisory authority of its home country or region and the banking regulatory agency of the State Council.

Article 11 The shareholder of a proposed Chinese-foreign joint venture bank shall satisfy the requirements provided in article 9 of these regulations. In addition, the foreign shareholder and the sole Chinese shareholder or the major Chinese shareholder shall be a financial institution, and the sole foreign shareholder or the major foreign shareholder shall also satisfy the following requirements:

(1) being a commercial bank;

(2) having maintained a representative office within the territory of the People's Republic of China;

(3) having total assets of not less than US$10 billion at the end of the year prior to the submission of the application; and

(4) having a capital adequacy ratio that meets the requirements prescribed by the financial supervisory authority of its home country or region and the banking regulatory agency of the State Council.

Article 12 A foreign bank that applies for establishing a branch shall satisfy the following requirements in addition to those provided in article 9 of these regulations:

(1) having total assets of not less than US$20 billion at the end of the year prior to the submission of the application;

(2) having a capital adequacy ratio that meets the requirements prescribed by the financial supervisory authority of its home country or region and the banking regulatory agency of the State Council; and

(3) having maintained a representative office within the territory of the People's Republic of China for over two years where the foreign bank applies for establishing its first branch.

Article 13 A foreign bank that has already established an operational foreign-funded bank within the territory of the People's Republic of China shall not establish a new representative office if it has already maintained a representative office, with the exception of establishment of a representative office in the areas covered by the regional development strategy or other related policies of the State.

If a representative office is changed with approval into an operational foreign-funded bank, the foreign bank shall go through the procedures for cancellation of registration of the original representative office in accordance with law.

Article 14 Where applying for establishing an operational foreign-funded bank, the applicant shall first apply for the preparation of the bank and submit the following application documents to the banking regulatory agency in the place where the proposed bank is to be established:

(1) an application letter, including the name, location, registered capital or operating capital, the business scope of the proposed bank;

(2) a feasibility study report;

(3) the draft articles of association of the proposed wholly foreign-funded bank or Chinese-foreign joint venture bank;

(4) the business contract signed by all shareholders of the proposed wholly foreign-funded bank or Chinese-foreign joint venture bank;

(5) articles of association of the shareholder of the proposed wholly foreign-funded bank or Chinese-foreign joint venture bank or of the foreign bank applying to establish a branch;

(6) the organizational chart, name-list of major shareholders, overseas establishments and associated enterprises of the shareholder of the proposed wholly foreign-funded bank or Chinese-foreign joint venture bank or of the foreign bank applying to establish a branch and its parent group;

(7) annual reports for the most recent three years of the shareholder of the proposed wholly foreign-funded bank or Chinese-foreign joint venture bank, or of the foreign bank applying to establish a branch;

(8) anti-money laundering systems adopted by the shareholder of the proposed wholly foreign-funded bank or Chinese-foreign joint venture bank, or by the foreign bank applying to establish a branch;

(9) photocopies of the business licence or the financial services permit, and the written opinions on the application issued by the financial regulatory authority of the home country or region of the shareholder of the proposed wholly foreign-funded bank, or of the foreign shareholder of the proposed Chinese-foreign joint venture bank, or of the foreign bank applying to establish a branch; and

(10) other documents specified by the banking regulatory agency of the State Council.

The banking regulatory agency in the place where the proposed bank is to be established shall submit the application documents together with its examination opinion to the banking regulatory agency of the State Council in due time.

Article 15 The banking regulatory agency of the State Council shall, within six months from the date of receiving the complete application documents required for the preparation for an operational foreign-funded bank, make a decision to approve or not to approve the preparation application and notify the applicant of such decision in writing; if deciding not to approve the preparation application, give the reasons thereof.

Where, in special circumstances, the banking regulatory agency of the State Council cannot complete the examination and make a decision to approve or not to approve the preparation application within the time limit prescribed in the preceding paragraph, it may appropriately extend the examination time limit and shall notify the applicant of the extension in writing; however, the extended time limit shall not exceed three months.

The applicant shall, by presenting the approval document for the preparation, obtain an application form for business commencement from the banking regulatory agency in the place where the proposed bank is to be established.

Article 16 The applicant shall complete the preparation of the proposed bank within six months from the date of obtaining the approval for preparation. Where the applicant fails to complete the preparation within the prescribed time limit, it shall provide the reasons thereof; and with the approval by the banking regulatory agency in the place where the proposed bank is to be established, the applicant may extend the preparation period for three months. Where the applicant fails to complete the preparation within the extended period, the decision of approval for the preparation issued by the banking regulatory agency of the State Council shall automatically become void.

Article 17 Upon completing the preparation and passing the preparation inspection, the applicant shall submit the completed application form for business commencement and the following documents to the banking regulatory agency in the place where the proposed bank is to be established:

(1) the name-list and curricula vitae of the principal persons-in-charge of the proposed bank;

(2) the power of attorney to the proposed principal persons-in-charge of the bank;

(3) the capital verification certificate issued by a statutory capital verification agency;

(4) documentation on security precautions and other business-related facilities;

(5) a guaranty letter issued by the foreign bank establishing a branch, stating that it shall be responsible for all the taxes and other indebtednesses the proposed branch will incur; and

(6) other documents required by the banking regulatory agency of the State Council.

The banking regulatory agency in the place where the proposed bank is to be established shall submit the application documents together with its examination opinion to the banking regulatory agency of the State Council in due time.

Article 18 The banking regulatory agency of the State Council shall, within two months from the date of receiving the complete application documents for business commencement, make a decision to approve or not to approve the application for business commencement and notify the applicant of such a decision in writing; if deciding to approve the application for business commencement, issue a financial services permit; if deciding not to approve the application for business commencement, give the reasons thereof.

Article 19 An approved operational foreign-funded bank shall, by presenting its financial services permit, register with the administrative department for industry and commerce and obtain a business licence.

Article 20 To establish a foreign bank representative office, the applicant shall submit the following application documents to the banking regulatory agency in the place where the proposed representative office is to be established:

(1) an application letter including, the name and location of the proposed representative office;

(2) the feasibility study report;

(3) the applicant's articles of association;

(4) an organizational chart, name-list of major shareholders, overseas branches and associated enterprises of the applicant and its group;

(5) the applicant's annual reports for the most recent three years;

(6) the applicant's anti-money laundering systems;

(7) photocopies of the personal identification, academic degree certificate and curriculum vitae of the appointed chief representative, as well as his statement of a clean record;

(8) the power of attorney to the appointed chief representative;

(9) photocopies of the business licence or financial services permit issued by the financial regulatory authority of the applicant's home country or region, and its written opinions on the application; and

(10) other documents specified by the banking regulatory agency of the State Council.

The banking regulatory agency in the place where the proposed representative office is to be established shall submit the application documents, together with its examination opinion to the banking regulatory agency of the State Council in due time.

Article 21 The banking regulatory agency of the State Council shall, within six months from the date of receiving the complete application documents for establishing a representative office by a foreign bank, make a decision to approve or not to approve the application for its establishment and notify the applicant of such decision in writing; if deciding not to approve the application for its establishment, give the reasons thereof.

Article 22 An approved foreign bank representative office shall, by presenting the approval document, register with the administrative department for industry and commerce and obtain a business registration certificate.

Article 23 The documents listed in articles 14, 17 and 20 of these regulations, with the exception of the annual reports, if prepared in a foreign language, shall be submitted together with a Chinese translation thereof.

Article 24 A foreign bank, with the approval of the banking regulatory agency of the State Council, may change any of its branches established within the territory of the People's Republic of China into a wholly foreign-funded bank solely funded by its parent bank, under the principles of legitimacy, prudence and business continuity. The applicant shall file an application for establishing a wholly foreign-funded bank in accordance with the conditions, procedures and application document requirements prescribed by the banking regulatory agency of the State Council.

Article 25 If a foreign bank branch changes into a wholly foreign-funded bank solely funded by its parent bank, such a foreign bank may, with the approval of the banking regulatory agency of the State Council, maintain one branch undertaking foreign exchange wholesale business within the prescribed time limit. The applicant shall file an application for such a branch in accordance with the conditions, procedures and application document requirements prescribed by the banking regulatory agency of the State Council.

The term "foreign exchange wholesale business" in the preceding paragraph means foreign exchange business services provided to customers other than individual customers.

Article 26 The directors, senior executives and the chief representative of a foreign-funded bank shall meet the qualification requirements prescribed by the banking regulatory agency of the State Council, and their appointment shall be subject to approval by the banking regulatory agency of the State Council.

Article 27 A foreign-funded bank shall, under any of the following circumstances, be subject to the approval by the banking regulatory agency of the State Council, and shall submit application documents in accordance with relevant requirements, and shall register with the administrative department for industry and commerce in accordance with law:

(1) changing registered capital or operating capital;

(2) changing the bank's name, or business or office premises;

(3) making adjustment to the scope of business;

(4) changing shareholders or their equity or stock holdings;

(5) making amendments to the articles of association; or

(6)any other circumstances prescribed by the banking regulatory agency of the State Council.

Where a foreign-funded bank replaces its directors, senior executives or the chief representative, it shall report the appointments to the banking regulatory agency of the State Council for the approval of qualifications.

Article 28 Where a foreign-funded bank or a Chinese-foreign joint venture bank changes its shareholder, the new shareholder shall satisfy the requirements for the shareholder provided in article 9, 10 or 11 of these regulations.

In special circumstances, the new shareholder may be exempted from the provisions of subparagraph (2) of article 10 or subparagraph (2) of article 11 of these regulations with the consent of the banking regulatory agency of the State Council.

Chapter III Scope of Business

Article 29 A wholly foreign-funded bank or a Chinese-foreign joint venture bank may, in accordance with the scope of business approved by the banking regulatory agency of the State Council, engage in part or all of the following foreign exchange and RMB businesses:

(1) receiving deposits from the general public;

(2) granting short-term, medium-term and long-term loans;

(3) handling acceptance and discounting of negotiable instruments;

(4) buying and selling government bonds and financial bonds, buying and selling foreign currency securities other than stocks;

(5) providing letter of credit services and guaranty;

(6) handling domestic and foreign settlement;

(7) buying and selling foreign exchange and acting as an agent for the purchase and sale of foreign exchange;

(8) acting as an agent for insurance companies;

(9) engaging in inter-bank lending;

(10) engaging in bank card business;

(11) providing safe deposit box services;

(12) providing credit information services and consultancy services; and

(13) other businesses approved by the banking regulatory agency of the State Council.

A wholly foreign-funded bank or a Chinese-foreign joint venture bank may, with the approval of the People's Bank of China, engage in foreign exchange settlement and sale businesses.

Article 30 A branch of a wholly foreign-funded bank or a Chinese-foreign joint venture bank shall conduct business within the business scope authorized by its parent bank and the branch's civil liabilities shall be borne by its parent bank.

Article 31 A foreign bank branch may, in accordance with the scope of business approved by the banking regulatory agency of the State Council, engage in part or all of the following foreign exchange businesses, and RMB businesses provided to customers other than Chinese citizens within the territory of China:

(1) receiving deposits from the general public;

(2) granting short-term, medium-term and long-term loans;

(3) handling acceptance and discounting of negotiable instruments;

(4) buying and selling government bonds and financial bonds, buying and selling foreign currency securities other than stocks;

(5) providing letter of credit services and guaranty;

(6) handling domestic and foreign settlements;

(7) buying and selling foreign exchange and acting as an agent for the purchase and sale of foreign exchange;

(8) acting as an agent for insurance companies;

(9) engaging in inter-bank lending;

(10) providing safe deposit box services;

(11) providing credit information services and consultancy services; and

(12) other businesses approved by the banking regulatory agency of the State Council.

A foreign bank branch may receive a time deposit of not less than 1 million yuan (US$126,580) for each time from the Chinese citizens within the territory of China.

A foreign bank branch may, with the approval by the People's Bank of China, engage in foreign exchange settlement and sale businesses.

Article 32 Civil liabilities of a foreign bank branch and its sub-branches shall be borne by its parent bank.

Article 33 A foreign bank representative office may engage in the non-operational activities relating to the businesses of the foreign bank it represents, including, among other activities, liaison, market research and consulting activities.

Civil liabilities incurred by a foreign bank representative office in its activities shall be borne by the foreign bank it represents.

Article 34 An operational foreign-funded bank applying to engage in the types of RMB businesses within the scope of business as prescribed in article 29 or 31 of these regulations, shall satisfy the following requirements and be subject to the approval by the banking regulatory agency of the State Council:

(1) having opened business within the territory of the People's Republic of China for at least three years prior to the application;

(2) having been profitable for two consecutive years prior to the application; and

(3) other prudential requirements prescribed by the banking regulatory agency of the State Council.

Where a foreign bank branch changes into a wholly foreign-funded bank solely funded by its parent bank, the time limit as prescribed in subparagraph (1) or (2) of the preceding paragraph shall be calculated starting from the date when the foreign bank branch is established.

Chapter IV Supervision

Article 35 An operational foreign-funded bank shall, in accordance with relevant provisions, develop the operating rules, improve management systems for risk management and internal control, and ensure the compliance with such rules, policies and procedures.

Article 36 An operational foreign-funded bank shall comply with the unified accounting rules of the State and the provisions of the banking regulatory agency of the State Council on information disclosure.

Article 37 An operational foreign-funded bank shall comply with the relevant provisions of the State when issuing external debts.

Article 38 An operational foreign-funded bank shall determine its deposit and loan interest rates and the rates of various service fees in accordance with the relevant provisions.

Article 39 An operational foreign-funded bank to engage in deposit-taking business shall deposit required reserves in accordance with the provisions of the People's Bank of China.

Article 40 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall comply with the asset/liability ratio requirement prescribed in the Law of the People's Republic of China on Commercial Banks. A wholly foreign-funded bank changed from a foreign bank branch and solely owned by its parent bank, or a wholly foreign-funded bank or Chinese-foreign joint venture bank established before these regulations take effect shall, where its asset/liability ratio fails to meet the requirement, satisfy such requirement within the time frame prescribed by the banking regulatory agency of the State Council.

The banking regulatory agency of the State Council shall have the power to require a wholly foreign-funded bank or Chinese-foreign joint venture bank identified with high risks or weak risk management to increase its capital adequacy ratio.

Article 41 An operational foreign-funded bank shall draw loan loss reserves in accordance with relevant provisions.

Article 42 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall comply with the provisions of the banking regulatory agency of the State Council on corporate governance.

Article 43 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall comply with the provisions of the banking regulatory agency of the State Council on connected transactions.

Article 44 Thirty percent of the operating capital of a foreign bank branch shall be maintained in the form of interest-bearing assets required by the banking regulatory agency of the State Council.

Article 45 A foreign bank branch's RMB operating capital plus RMB reserves shall be no less than 8 percent of the branch's RMB risk assets.

The banking regulatory agency of the State Council shall have the power to require a foreign bank branch identified with high risk and weak risk management to increase the ratio set forth in the preceding paragraph.

Article 46 A foreign bank branch shall ensure the liquidity of its assets. The ratio of its current assets to its current liabilities shall be no less than 25 percent.

Article 47 A foreign bank branch's total domestic assets denominated both in RMB and foreign currencies shall be no less than its total domestic liabilities denominated both in RMB and foreign currencies.

Article 48 A foreign bank that establishes two or more branches in the territory of the People's Republic of China shall designate one of these branches for the overall management of all the other branches.

The banking regulatory agency of the State Council shall conduct consolidated supervision over the branches established by a foreign bank within the territory of the People's Republic of China.

Article 49 An operational foreign-funded bank shall, in accordance with the relevant provisions of the banking regulatory agency of the State Council, report to the local banking regulatory agency on the cross-border funds movement and assets transfer of a large amount.

Article 50 The banking regulatory agency of the State Council shall, in light of the risk profile of an operational foreign-funded bank, have the power to take such special supervisory measures as issuing an order to suspend part of its business or replace its senior executive.

Article 51 An operational foreign-funded bank shall hire an accounting firm established within the territory of People's Republic of China to audit the bank's financial reports, and shall report such a hiring decision to the local banking regulatory agency. Where the hiring contract is terminated, the reasons therefore shall be presented.

Article 52 An operational foreign-funded bank shall, in accordance with relevant provisions, submit its financial and accounting reports, statements and other relevant data to the banking regulatory agency.

The representative office of a foreign bank shall, in accordance with relevant provisions, submit relevant data to the banking regulatory agency.

Article 53 A foreign-funded bank shall be cooperative in the supervision and inspection carried out by the banking regulatory agency, and shall not refuse or hamper such supervision and inspection.

Article 54 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall each put into place an independent internal control system, risk management system, financial and accounting system, and computer information management system.

Article 55 The chairman of the board of directors and senior executives of a wholly foreign-funded bank established by a foreign bank within the territory of the People's Republic of China, and the senior executives of the same foreign bank's branch engaging in foreign exchange wholesale business shall not hold concurrent positions in each other's organizations.

Article 56 Transactions between a wholly foreign-funded bank established by a foreign bank within the territory of the People's Republic of China and the same foreign bank's branch engaging in foreign exchange wholesale business shall be based on market terms and shall not be more favorable than the terms of the transactions between either entity and its non-related parties. Such a foreign bank shall provide full guaranty to the cash transactions between the forementioned wholly foreign-funded bank and the foreign bank's branch.

Article 57 A foreign bank's representative office and its staff shall not engage in any form of operational business activities.

Chapter V Termination and Liquidation

Article 58 Where an operational foreign-funded bank decides to terminate its business activities, it shall apply in writing to the banking regulatory agency of the State Council 30 days prior to the date of termination and, upon examination and approval, effect its dissolution or closure and proceed to liquidation.

Article 59 Where an operational foreign-funded bank falls into insolvency, the banking regulatory agency of the State Council shall have the power to issue an order to suspend its business and clear its liability within a specified period of time. Where, within the specified period of time, such a bank recovers its solvency and intends to resume its business, it shall apply in writing to the banking regulatory agency of the State Council for the resumption of its business; where it fails to recover its solvency when the specified time limit is due, it shall effect its liquidation.

Article 60 Where an operational foreign-funded bank is terminated because of dissolution, closure, abolished according to law or declaration of bankruptcy, the liquidation shall be proceeded in accordance with the relevant laws and regulations of the People's Republic of China.

Article 61 Upon completion of its liquidation, an operational foreign-funded bank shall go through procedures for cancellation of registration with the original registration organ within the statutory time limit.

Article 62 Where a foreign bank's representative office terminates its activities at its own discretion, it shall effect its closure upon approval of the banking regulatory agency of the State Council, and shall go through procedures for the cancellation of registration with the original registration organ within the statutory time limit.

Chapter VI Legal Liability

Article 63 Where a party, without approval of the banking regulatory agency of the State Council, establishes a foreign-funded bank or illegally engages in the activities within the business scope of a banking institution, the banking regulatory agency of the State Council shall have the power to have such a bank or activities banned. And within five years following the date of the ban, the banking regulatory agency of the State Council shall not accept the application submitted by the said party for establishing a foreign-funded bank. Where a crime is constituted, the criminal liability shall be investigated for according to law. Where no crime is constituted, the banking regulatory agency of the State Council shall confiscate the illegal income and impose a fine of one to five times the amount of the illegal income if the illegal income is more than 500,000 yuan. If there is no illegal income or the illegal income is less than 500,000 yuan (US$63,300), a fine of not less than 500,000 yuan and not more than 2 million yuan shall be imposed.

Article 64 Where an operational foreign-funded bank commits any of the following acts, the banking regulatory agency of the State Council shall order it to make corrections and confiscate its illegal income, if any; if the illegal income is more than 500,000 yuan, a fine of one to five times the amount of the illegal income shall be imposed thereupon; if there is no illegal income or the illegal income is less than 500,000 yuan, a fine of not less than 500,000 yuan and not more than 2 million yuan shall be imposed thereupon. Where the circumstances are extremely serious or the operational foreign-funded bank fails to make corrections within the prescribe time limit, the banking regulatory agency of the State Council may order a suspension of its business for rectification or revoke its financial services permit. Where a crime is constituted, the criminal liability shall be investigated for according to law:

(1) establishing a branch without approval;

(2) being modified or terminated without approval;

(3) engaging in business activities without approval; or

(4) raising or lowering deposit interest rates or loan interest rates in violation of relevant requirements.

Article 65 Where a foreign-funded bank commits any of the following acts, the banking regulatory agency of the State Council shall order it to make corrections and impose thereupon a fine of not less than 200,000 yuan (US$25,300) and not more than 500,000 yuan; where the circumstances are extremely serious or the foreign-funded bank fails to make corrections within the time limit, the banking regulatory agency of the State Council may order a suspension of its business for rectification, revoke its financial services permit, or close its representative office; where a crime is constituted, the criminal liability shall be investigated for according to law:

(1) failing to comply with relevant provisions on information disclosure;

(2) refusing or impeding the supervision and inspection by the banking regulatory agency of the State Council;

(3) providing the financial and accounting reports, statements or other data that are false or in which important facts are concealed;

(4) concealing or destroying the documents, certificates, accounting books, electronic data or other materials needed in supervision and inspection;

(5) appointing a director, senior executive or chief representative without verification of the qualification; or

(6) refusing to implement the special supervisory measures defined in article 50 of these regulations.

Article 66 Where an operational foreign-funded bank, in violation of the relevant provisions of these regulations, fails to submit its financial and accounting reports, statements or other related data within the prescribed time limit, or fails to develop the operating rules or improve relevant management systems, the banking regulatory agency of the State Council shall order it to make corrections within a prescribed time limit, and, impose a fine of not less than 100,000 yuan and not more than 300,000 yuan (US$37,800) if the bank fails to do so.

Article 67 Where an operational foreign-funded bank engages in any business, in violation of the provisions of chapter IV of these regulations or in serious violation of other prudential business rules, the banking regulatory agency of the State Council shall order it to make corrections and impose a fine of not less than 200,000 yuan and not more than 500,000 yuan; where the circumstances are extremely serious or the bank fails to make corrections within the prescribed time limit, the banking regulatory agency of the State Council may order a suspension of its business for rectification, or revoke its financial services permit.

Article 68 Where an operational foreign-funded bank violates these regulations, the banking regulatory agency of the State Council shall, in addition to the penalties provided for in articles 63 to 67 of these regulations, take the following actions by taking into account the specific circumstances:

(1) ordering the replacement of the director, senior executive or any other person directly responsible for the violation;

(2) giving a warning, where the violation does not constitute a crime, to the director, senior executive or any other person directly responsible for the violation, and imposing a fine of not less than 50,000 yuan and not more than 500,000 yuan; or

(3) disqualifying the director or senior executive directly responsible for the violation from holding any management position within the territory of the People's Republic of China for a specified time limit or for life; or prohibiting the director, senior executive or any other person directly responsible for the violation from engaging in banking business within the territory of the People's Republic of China for a specified time limit or for life.

Article 69 Where a representative office of a foreign bank, in violation of these regulations, engages in operational business activities, the banking regulatory agency of the State Council shall order it to make corrections, give a warning, confiscate its illegal income, and impose a fine of one to five times the amount of its illegal income where the illegal income is more than 500,000 yuan; or impose a fine of not less than 500,000 yuan and not more than 2 million yuan where there is no illegal income or the illegal income is less than 500,000 yuan; where the circumstances are extremely serious, such representative office shall be closed by the banking regulatory agency of the State Council; where a crime is constituted, criminal liability shall be investigated for in accordance with law.

Article 70 Where a representative office of a foreign bank commits any of the following acts, the banking regulatory agency of the State Council shall order it to make corrections and give a warning, and impose a fine of not less than 100,000 yuan and not more than 300,000 yuan; where the circumstances are serious, its chief representative shall be disqualified from holding the position within the territory of the People's Republic of China for a prescribed time limit, or the bank the office represents shall be required to replace the chief representative; where the circumstances are extremely serious, such representative office shall be closed by the banking regulatory agency of the State Council:

(1) changing the office premises without approval;

(2) failing to submit the required documents to the banking regulatory agency of the State Council; or

(3) violating these Regulations or other requirements prescribed by the banking regulatory agency of the State Council.

Article 71 Where a foreign-funded bank violates other laws and regulations of the People's Republic of China, the case shall be dealt with by the relevant competent organs according to law.

Chapter VII Supplementary Provisions

Article 72 These regulations apply mutatis mutandis to the banking institutions established in the Chinese mainland by financial institutions from the Hong Kong Special Administrative Region, the Macao Special Administrative Region, or Taiwan region. However, if otherwise specially provided by the State Council, those provisions shall prevail.

Article 73 These regulations shall be effective as of December 11, 2006. The Regulations of the People's Republic of China on Administration of Foreign-funded Financial Institutions promulgated by the State Council on December 12, 2001 shall be repealed simultaneously.