China Development Bank, which was fined nearly 12 million yuan at the beginning of the year, received a 10-million-dollar fine of 42.661,600 yuan. China Development Bank has been fined a total of 54.66 million yuan so far this year.
Earlier this year, China Development Bank was fined 48.8 million yuan by the China Banking and Insurance Regulatory Commission late last year for 24 violations and two officials were given warnings, the regulator disclosed.
Broker Chinese reporters noted that the State Administration of Foreign Exchange (SAFE) released a foreign exchange violation case on February 3, showing that branches of 14 banks, including China Construction Bank and Guangdong Development Bank, were fined a total of more than 53 million yuan for violating the Foreign Exchange Control Regulations.
China Development Bank gets biggest bank fine since Year of the Ox
The Hainan branch of China Development Bank (CDB) was warned and fined 42.6616 million yuan for illegally providing foreign guarantee without authorization, according to the administrative penalty information released by the Hainan branch of the State Administration of Foreign Exchange on March 10. The penalty decision date is March 3, 2021.
According to the administrative penalty information, the above behavior of Hainan Branch of China Development Bank violates Article 12 and Article 27 of Annex 1 of the Notice of the State Administration of Foreign Exchange on Issuance of the Regulations on Foreign Exchange Management of Cross-border Guarantee > (Huifa  No. 29).
According to the safe website published “cross-border guarantee regulation on administration of foreign exchange (hereinafter referred to as the regulations), article 12, the guarantor is dealt with in such release loan business, deal with the debtor subject qualification, guarantee capital USES, estimated payments under capital source, guarantees the possibility of the performance audit and related trade background, whether to conform to the due diligence and related laws and regulations, and supervise the debtor in the proper manner according to the stated purposes under guarantee money.
In addition, the Provisions require that guarantors and debtors shall not sign cross-border guarantee contracts when they know or should know that the guarantee performance obligation is determined to occur.
However, according to Article 43 of the Regulations on Foreign Exchange Control of the People’s Republic of China, the foreign exchange administration agencies shall give a warning and impose a fine of less than 30% of the illegal amount to those who violate the administration of foreign debt, such as borrowing money from foreign countries without authorization, issuing bonds overseas or providing foreign guarantees.
At the beginning of the year was confiscated nearly 12 million
In fact, this huge fine is not the only one that China Development Bank has received recently.
On February 3, the Hainan Branch of China Development Bank was fined 11.9791 million yuan and three persons in charge were fined by the Hainan Branch of the State Administration of Foreign Exchange for failing to properly check the authenticity of the transaction documents and their consistency with the foreign exchange income and expenditure.
It also means that China Development Bank’s Hainan branch and related officials have been fined nearly three years after CEFC’s exposure to the risks.
Specifically, the branch was ordered to correct within a time limit, fined RMB 1 million, and confiscated the illegal income of RMB 10.9791 million. Hu, the then president of the branch, was given a warning and fined RMB50,000; Yang, the then president of the branch, was given a warning and fined RMB50,000; Wang, then vice president of the branch, was given a warning and fined RMB50,000. The penalty was issued on Jan. 12, 2021, according to penalty information.
So far this year, CDB’s Hainan branch has been fined 544.407 million yuan for foreign exchange violations.
In fact, China Development Bank was fined 48.8 million yuan at the end of December for 24 violations, including providing financing for illegal projects, issuing land reserve loans in a disguised way to transfer loans and increase deposits, and reporting cases late and concealing information, according to the CBRC in early January. Liu, then president of Zhejiang Branch of China Development Bank, and Ni, then vice president of Zhejiang Branch of China Development Bank, were given warnings respectively for their responsibility for failing to make corrections on time, making repeated checks, illegally adding new businesses, and providing false rectification instructions to the inspection team.
Strict investigation of foreign exchange violations, a number of large banks were notified
Journalists from brokerages have noted that the State Administration of Foreign Exchange (SAFE) has recently strengthened supervision of the foreign exchange market and cracked down on illegal activities in the foreign exchange sector, with a focus on cracking down on fake and deceptive foreign exchange transactions.
On February 3 this year, the State Administration of Foreign Exchange (SAFE) published a notice on banks’ foreign exchange violations on its official website. It reported 11 typical cases of foreign exchange violations, involving branches of 14 banks, which were fined more than 53 million yuan.
To be specific, the 14 related banks include China Construction Bank, Industrial and Commercial Bank of China (601398.sh), Bank of Communications, Minsheng Bank, China Merchants Bank, Agricultural Development Bank, China Development Bank, China Citic Bank, Guangda Bank, Huaxia Bank and other related branches. The main illegal foreign exchange activities involved capital settlement, cross-border guarantee, trade in goods, trade in services, bank card transactions, cross-border debt transfer and other businesses.
In addition to CDB, China Construction Bank Qingdao Branch and Guangdong Development Bank Wenzhou Branch were fined tens of millions of dollars. From January 2017 to May 2017, CCB Qingdao Branch transferred the creditor’s rights involved in the stock of domestic loans to overseas banking institutions without approval and collected the consideration, and was fined 10.315 million yuan. From January 2015 to February 2016, the Wenzhou Branch of Guangdong Development Bank failed to fulfill its audit responsibility and illegally handled the business of “Offshore Loan under Onshore Guarantee”. It was warned and fined 17.64 million yuan.
In the next step, while realizing high-level trade and investment liberalization and facilitation, the SAFE will strengthen supervision and inspection of foreign exchange, effectively prevent risks of cross-border capital flow and safeguard national economic and financial security, according to the relevant personnel of the SAFE.
In December 2020, Pan Gongsheng, Director of the State Administration of Foreign Exchange, chaired a meeting of the Leading Party Members’ Group, which stressed that we should continue to fight against and defuse major financial risks in the foreign exchange sector. We will strengthen monitoring and analysis of cross-border capital flows, crack down on illegal activities in the foreign exchange sector with a zero-tolerance attitude, and safeguard China’s economic and financial security.