To meet the development needs of the foreign currency banknotes business in China, and further regulate the management of receipts and payments of foreign currency banknotes by domestic institutions, the State Administration of Foreign Exchange (SAFE) recently released the Circular of the SAFE on Printing and Distributing the Measures for Managing the Receipts and Payments of Foreign Currency Banknotes by Domestic Institutions (Huifa No. 47 [2015], the Circular).

The Circular is highlighted as follows: First, specifying the conditions for the receipts and payments of foreign currency banknotes by domestic institutions. When bank channels are inaccessible, such as in the cases of unsmooth transfer channels and transactions with countries/regions that are stricken by war or have poor financial facilities, domestic institutions will be allowed to handle part of receipts and payments under the current account in foreign currency banknotes. Second, specifying the requirements on banks in reviewing the receipts and payments of foreign currency banknotes. Under the principles of "knowing your customer", "understanding your business" and "due diligence", banks are required to review the authenticity, legitimacy and necessity of the receipts and payments of foreign currency banknotes. Third, improving relevant foreign exchange regulations. The SAFE will strengthen data acquisition and analysis and enhance ex-post regulation and investigation of misconduct.

The Circular shall come into force as of February 1, 2016. The Interim Measures for the Administration of Collection and Payment of Foreign Cash by Domestic Institutions (Huiguanhanzi No. 211 [1996]) shall be abolished simultaneously.