To standardize and facilitate operation by banks and individuals in respect of foreign exchange business, the State Administration of Foreign Exchange (SAFE) recently issued the Circular of the State Administration of Foreign Exchange on Further Improving the Administration of Individual Foreign Exchange (Huifa No. 49 [2015], the Circular).

The Circular is highlighted as follows: First, the individual foreign exchange business monitoring system will be launched nationwide on January 1, 2016 and at the same time, the management information system for foreign exchange settlement and sales for individuals will be no longer in use. Second, the watch list management for individual foreign exchange business will be improved. An individual who borrows another individual's quota to handle foreign exchange settlement and sales will be put on a watch list; a risk reminder will be first issued to individuals who lend their quotas to help another individual for split settlement and sales of foreign exchange and then these individuals will be put on a watch list if they lend their quotas again. Third, regulations will be streamlined. Five foreign exchange administration regulations involving settlement and sales of foreign exchange for individuals will be nullified for deepening the understanding of and facilitating the execution by market players.

Launched as the Circular is issued, the individual foreign exchange business monitoring system is designed to further facilitate foreign exchange handling by banks and individuals and improve the monitoring efficiency in respect of individual foreign exchange business, under the existing framework for the administration of individual foreign exchange. To acquire full-scale data, this system supports over-the-counter individual foreign exchange business as well as individual foreign exchange business through other channels and will run more stably. Moreover, the system, interfaced with the operating systems of banks, can effectively reduce repeated inputting by operators at banks. With this system, foreign exchange authorities will strengthen the watch list management and offsite monitoring, by acquiring, analyzing, and disseminating relevant data in a centralized manner and sharing the watch list across the country.

The Circular shall come into force on January 1, 2016.