This English translation is for reference only. The Chinese version shall prevail in case of any inconsistencies.
Notice by the Guangdong Branch of the People’s Bank of China ofIssuingMeasures for the Administration of Multi-Functional Free Trade Accounts in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin
For the purpose of implementing the Master Plan for the Construction of Guangdong-Macao In-Depth Cooperation Zone in Hengqi, the Opinions of the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and the People’s Government of Guangdong Province on Giving Financial Support to the Building of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, and the Notice by the People’s Bank of China and the State Administration of Foreign Exchange on Issuing the Construction Plan for the “Electronic Fence System” for the Hainan Free Trade Port and the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, and to standardize the work related to multi-functional free trade accounts in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, the Guangdong Branch of the People’s Bank of China has formulated the Measures for the Administration of Multi-Functional Free Trade Accounts in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (see Annex). This document is hereby issued for your compliance and implementation. Any issues encountered during the implementation shall be reported to the Guangdong Branch of the People’s Bank of China promptly.
The Zhuhai Branch of the People’s Bank of China shall forward this Notice to all banks within its jurisdiction.
Guangdong Branch of the People’s Bank of China
April 3, 2024
Annex
Measures for the Administration of Multi-Functional Free Trade Accounts in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin
Chapter 1General Provisions
Article 1.In accordance with the Law of the People’s Republic of China on the People’s Bank of China and the Law of the People’s Republic of China on Commercial Banks, the Measures for the Administration of Multi-functional Free Trade Accounts in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (hereinafter referred to as the “Measures”) are developed for the purpose of implementing the Master Plan for the Construction of Guangdong-Macao In-Depth Cooperation Zone in Hengqin, the Opinions of the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and the People’s Government of Guangdong Province on Giving Financial Support to the Building of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, and the Notice by the People’s Bank of China and the State Administration of Foreign Exchange on Issuing the Construction Plan for the “Electronic Fence System” for the Hainan Free Trade Port and the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, and to standardize the work related to multi-functional free trade accounts in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (hereinafter referred to as the “Cooperation Zone”).
Article 2. These Measures shall apply to the separate accounting operations of multi-functional free trade accounts conducted by banking institutions within the Cooperation Zone.
Article 3.The separate accounting operations of multi-functional free trade accounts in the Cooperation Zone refer to services provided by banks within the Cooperation Zone that adapt to the needs of high-level trade and investment liberalization and facilitation. Based on the existing free trade accounts, these services offer eligible business entities cross-border fund settlement, foreign exchange, investment and financing, and other related financial services.
A multi-functional free trade account refers to a unified domestic and foreign currency account provided by banking institutions to meet customer needs for separate accounting services in multi-functional free trade.
Institutions within the Cooperation Zone refer to enterprises legally registered and established in the Cooperation Zone (including legal persons and unincorporated organizations), as well as public institutions, social groups, or other organizations legally established in the Cooperation Zone.
Overseas institutions refer to legal persons and other organizations legally registered and established outside the Chinese mainland (including Hong Kong, Macao and Taiwan regions).
Overseas individuals refer to natural persons who hold overseas identifications.
Article 4.The separate accounting operations of multi-functional free trade accounts shall adhere to the principles of “openness at the first-line, cross-border management at the second-line, and limited penetration across the second line for accounts with the same name.” Banking institutions in the Cooperation Zone shall conduct appropriate reviews of account fund flows in accordance with the three principles of “know your customer, know your business, and conduct due diligence.” For clients opening multi-functional free trade accounts, banking institutions in the Cooperation Zone shall implement the requirements of anti-money laundering, anti-terrorist financing, and anti-tax evasion policies.
Chapter 2Classification and Management of Free Trade Accounts
Article 5. Banking institutions in the Cooperation Zone shall open multi-functional free trade accounts for eligible business entities within the separate accounting unit of the Cooperation Zone. The account prefixes are designated as “EFE,” “EFN,” “EFF,” and “EFU,” respectively.
Article6.Institutions within the Cooperation Zone opening an EFE account shall meet the following conditions:
1. They have been registered and established in the Cooperation Zone for six months or more;
2. They are not included in the key regulatory list for cross-border RMB business.
3. Their classification in the Directory of Enterprises With Foreign Exchange Receipts and Payments in Trade in Goods is not listed as Category B or Category C.
4. They have had no major violations of laws or regulations in the past three years.
5. Miscellaneous.
In principle, institutions in the Cooperation Zone permitted to open EFE accounts are limited to high-quality enterprises with genuine needs for foreign trade and investment. High-quality enterprises shall engage in substantive operations within the Cooperation Zone, with their actual management institutions located in the Zone. These enterprises shall exercise substantial and comprehensive management and control over their production, operations, personnel, finance, and assets. Furthermore, they shall maintain stable production and operational conditions, adhere to integrity and legal compliance, and meet the compliance requirements for cross-border fund settlements. In the future, as business operations develop, the scope shall be gradually expanded under the premise of controllable risks.
For institutions within the Cooperation Zone engaged in industries aligned with the zone’s development direction, such as scientific and technological research and development and high-end manufacturing industries, high-end manufacturing, Macao-branded traditional Chinese medicine, culture, tourism, exhibition, and modern finance, the account opening requirements may be appropriately relaxed.
Article 7.Overseas institutions opening an EFN account shall meet the following conditions:
1. They have been registered and established for one year or more;
2. For foreign institutions from high-risk countries or regions for money laundering and terrorist financing, or those engaged in sensitive industries such as gambling, enhanced identity verification measures shall be implemented based on their risk profiles.
3. The registration duration requirements may be appropriately relaxed for legal entities and other organizations registered in Macao, Chinese-funded enterprises “going abroad,” or relevant overseas enterprises of projects along the “Belt and Road” initiative.
Article 8. Overseas individuals opening an EFF account shall meet the following conditions:
1. Non-resident individuals studying, working, and living in the Cooperation Zone;
2. They are not included in the sanctions list of the United Nations Security Council resolutions.;
3. For overseas individuals from countries or regions with high risks of money laundering and terrorist financing, enhanced due diligence measures shall be implemented.
The opening of EFF accounts by non-resident individuals is, in principle, limited to individuals from Hong Kong and Macao, as well as overseas high-level and urgently needed talents. In the future, as business operations develop, the scope shall be gradually expanded under the premise of controllable risks.
Article 9. Interbank institutions opening an EFU account shall be: overseas financial institutions or other domestic financial institutions capable of separate accounting.
Article 10.Banking institutions in the Cooperation Zone that carry out the separate accounting business of multi-functional free trade accounts shall assume primary responsibility for the legality and compliance of the accounts. They shall establish and improve the management system for multi-functional free trade accounts, detail the procedures for account opening, and strictly implement the requirements of the Measures for the Administration of RMB Current Accounts with Banks and the Measures for the Administration of RMB Current Accounts with Banks of Overseas Institutions. Additionally, they shall identify the beneficial owners of non-natural person clients as required by the regulations.
Article 11.Banking institutions within the Cooperation Zone that have doubts about the authenticity of account opening documentation or assess the risk level of customers as high shall enhance the verification of the customer’s identity and the authenticity of their intention to open an account, and implement corresponding customer due diligence and other risk control measures. If a financial institution is unable to identify a client’s identity despite taking effective measures, or if the risk assessment exceeds the institution’s risk management capacity, it shall not establish or maintain a business relationship with the client. Banking institutions shall strengthen the full lifecycle management of multi-functional free trade accounts and mitigate settlement-related risks.
Article 12.Prior to the implementation of the Measures, if institutions in the Cooperation Zone have already opened a free trade account and meet the account opening conditions specified in Article 6, banking institutions may open multi-functional free trade accounts based on client needs. However, the original free trade account will no longer be retained.
Banking institutions shall strengthen internal coordination to ensure a seamless transition between the opening and management of multi-functional free trade accounts and the operations of the original free trade accounts.
Article 13.Multi-functional free trade accounts shall, in principle, not be used for cash transactions.
Chapter 3 Business Rules
Article 14.Funds may be freely transferred across the first-line between multi-functional free trade accounts and overseas accounts, OSA accounts, NRA accounts, as well as between multi-functional free trade accounts, in accordance with the law and based on payment instructions. The client’s payment and receipt instructions shall meet the relevant information reporting requirements, and the client shall ensure the authenticity, legality, and compliance of the transaction background.
Article 15.Transfers between multi-functional free trade accounts and domestic resident settlement accounts, crossing the “second line,” shall be managed according to cross-border transaction regulations. Such transfers shall be conducted in RMB, with banking institutions performing authenticity verification in accordance with the three principles of “know your customer, know your business, and conduct due diligence.”
Article 16.Transactions involving capital items other than securities investment between EFE accounts and overseas accounts are not subject to limitations on investment gap foreign debt, comprehensive cross-border financing, or overseas lending quotas and approvals. There is no need to conduct pre-business registration, filing, or open special accounts with the foreign exchange management department.
For overseas investments, banking institutions within the Cooperation Zone shall conduct periodic reviews, including random mid-process and ex-post checks, to ensure enterprises’ compliance with overseas investment project filing and approval procedures. Any abnormal transactions or illegal activities detected shall be promptly reported to the Zhuhai Branch of the People’s Bank of China. For external payments exceeding the equivalent of USD 50,000 in a single transaction for trade in services, primary income, or secondary income, banking institutions within the Cooperation Zone may conduct post-transaction verification of the “Recordation Form for Foreign Payments under Trade in Services and Other Items.”
Article 17.Transfers between EFE accounts and domestic resident settlement accounts with different account names are limited to fund settlements for goods trade that are managed as deemed import and export by customs. Banking institutions in the Cooperation Zone may appropriately simplify the relevant procedures based on the client’s risk profile.
Apart from the above transfers, fund transfers between institutions within the Cooperation Zone and domestic institutions or individuals outside the Cooperation Zone shall be conducted through domestic settlement accounts and not via EFE accounts.
Article 18. Transfers between EFE accounts and domestic settlement accounts held under the same name are subject to quota management, allowing limited “penetration.” The use of “penetration” funds transferred between these accounts is managed by a negative list to meet the fund transfer needs of institutions within the Cooperation Zone. Transfers involving "penetration" funds under the same name must be conducted in RMB, and both accounts must be opened at banking institutions within the Cooperation Zone (for real estate enterprises, the two accounts shall be opened at the same banking institution within the Cooperation Zone).Transfers are based on payment instructions, following these requirements:
1. The use of “penetration” funds under the same name is managed by a negative list: funds may not be used directly or indirectly for expenses outside the business scope or prohibited by national laws and regulations; unless otherwise specified, funds may not be used directly or indirectly for securities investment or other financial investments (excluding low-risk financial products and structured deposits); unless explicitly permitted in the business scope, funds may not be used to grant loans to non-affiliated enterprises; funds may not be used for the construction or purchase of non-owner-use real estate (except for projects within the Cooperation Zone).
2. The limited “penetration” quota for same-name transfers is subject to bidirectional scale management:
The upper limit for net inflows from same-name transfers for enterprises = the enterprise’s owner’s equity in the previous year × macro-prudential adjustment parameter × inflow leverage ratio.
The upper limit for net outflows from same-name transfers for enterprises = the enterprise’s owner’s equity in the previous year × macro-prudential adjustment parameter × outflow leverage ratio.
The macro-prudential adjustment parameter is temporarily set at 1, with both the inflow leverage ratio and outflow leverage ratio also set at 1.
The Guangdong Branch of the People’s Bank of China shall adjust the macro-prudential regulation parameters and leverage ratio according to procedures in response to changes in the macroeconomic situation, and strengthen the monitoring and management of relevant large-amount and high-frequency capital flows. Banking institutions and enterprises shall manage quotas and fund usage to ensure that net inflow or outflow at any given time does not exceed the upper limit.
Article 19.EFF accounts may offer overseas individuals convenient fund settlement services for salary remittance, medical treatment, tourism, and other purposes approved by relevant authorities. Fund transfers between EFF accounts and overseas accounts or accounts within the Cooperation Zone for these purposes are processed based on payment instructions and settled in RMB.
Article 20.The foreign and local currency positions generated by banking institutions handling multi-functional free trade accounts shall be squared off either among separate accounting units or offshore, with the bank’s head office or its authorized branches conducting relevant operations according to offshore exchange rates.
Duly authorized branches possessing the requisite international business capabilities may engage in interbank lending and position squaring through their respective EFU accounts. Banking institutions shall implement robust ongoing monitoring and ex-post controls to effectively mitigate risks.
Chapter 4 Access and Management of Banking Institutions
Article 21.Banking institutions in the Cooperation Zone may apply to participate in the pilot program for the separate accounting business of multi-functional free trade accounts. Banking institutions shall establish appropriate internal management systems, risk control mechanisms, and systems for the separate accounting operations of multi-functional free trade accounts, and may only conduct such business after meeting the relevant requirements.
Article 22.Banking institutions participating in the pilot program in the Cooperation Zone shall, based on their specific circumstances, establish and enhance comprehensive internal management systems for the separate accounting operations of multi-functional free trade accounts. These systems should clearly define operational guidelines and delineate responsibilities. Furthermore, the institutions shall establish appropriate procedures for the management of funds related to multi-functional free trade accounts. The institutions shall ensure that external funds are used for external purposes and maintain a balance within the accounts to ensure stable and effective operations.
Participating banking institutions shall enhance their anti-money laundering and counter-terrorism financing internal control systems. If they detect or have reasonable grounds to suspect that a multi-functional free trade account holder, their funds or other assets, or their transactions (attempted or completed) are connected to money laundering, terrorism financing, or other criminal activities, the institutions shall file suspicious transaction reports as mandated by applicable regulations.
Article 23. Banking institutions participating in the pilot program in the Cooperation Zone shall establish risk control and emergency response systems for the multi-functional free trade account separate accounting business. They shall ensure effective risk identification, monitoring, and early warning to effectively prevent cross-border capital flow risks.
Article 24. Banking institutions participating in the pilot program in the Cooperation Zone shall, in accordance with this regulation, enhance relevant business systems to ensure the secure and stable operation of separate accounting business of multi-functional free trade accounts.
Article 25. Banking institutions within the Cooperation Zone are required to conduct a comprehensive self-assessment of their operational readiness for the separate accounting of multi-functional free trade accounts before submitting an application. This self-assessment should encompass, but not be limited to, the following aspects:
1. Internal authorization procedures, including clearly defined authorization flows for interbank lending and position squaring conducted via EFU accounts;
2. Chart of accounts, accounting procedures, and other financial accounting policies for separate accounting;
3. Treasury management and cross-border capital risk management systems for separate accounting;
4. Operational procedures for all aspects of separate accounting management;
5. Anti-money laundering and anti-terrorism financing risk assessment reports and corresponding risk control measures for the multi-functional free trade account separate accounting business;
6. Implementation measures for internal risk control;
7. Internal contingency plans (including liquidity risks, emergencies, etc.);
8. System readiness status;
9. Other documentation or materials required by the People’s Bank of China.
Article 26.After completing all necessary preparations, banking institutions in the Cooperation Zone may formally apply to the Guangdong Branch of the People’s Bank of China for access to relevant systems. Applications shall be submitted in writing and include, but are not limited to, the following supporting documents:
1. Application form;
2. Self-assessment report on the separate accounting operations for multi-functional free trade accounts;
3. Internal management and risk control frameworks for separate accounting of multi-functional free trade accounts.
4. System readiness status;
5. Other documentation or materials required by The People’s Bank of China.
Article 27.The Guangdong Branch of the People’s Bank of China shall establish a prudential risk assessment mechanism for the separate accounting operations of multi-functional free trade accounts. Initial assessments will be conducted for banking institutions applying to offer these accounts for the first time. Subsequent evaluations will be conducted periodically based on business operations and risk considerations.
Article 28. Pilot banking institutions in the Cooperation Zone shall implement robust ongoing monitoring and ex-post reviews of their separate accounting operations of multi-functional free trade accounts. Banking institutions may implement appropriate risk control measures against account holders found to have violated the authenticity commitment or engaged in transactions where payment instructions do not align with the intended purpose. A report detailing the findings of the investigation shall be submitted to the Zhuhai Branch of the People’s Bank of China.
Chapter 5 Supervision and Administration
Article 29. The Guangdong Branch of the People’s Bank of China shall supervise and regulate the separate accounting operations of multi-functional free trade accounts conducted by banking institutions in the Cooperation Zone, in accordance with applicable laws and regulations. The Guangdong Branch of the People’s Bank of China authorizes the Zhuhai Branch to monitor the implementation of the separate accounting operations of multi-functional free trade accounts and conduct routine supervision of these operations.
Article 30. The Guangdong Branch of the People’s Bank of China and the Guangdong Branch of the State Administration of Foreign Exchange shall establish a coordinated domestic and foreign currency regulatory framework for the separate accounting operations of multi-functional free trade accounts. This framework will include developing risk management plans and implementing an off-site monitoring system, with relevant indicators, based on system-collected data.
Article 31. All parties involved in separate accounting operations of multi-functional free trade accounts shall comply with reporting requirements stipulated by the prevailing international balance of payments statistical system and relevant business regulations. Pilot banking institutions in the Cooperation Zone, in accordance with applicable regulations from the People’s Bank of China and the State Administration of Foreign Exchange, shall report multi-functional free trade account fund transfer data to the following systems: RMB Cross-border Payment Management Information System (RCPMIS), Free Trade Zone Monitoring Information System (FTZMIS), and ASOne.
Article 32. The Zhuhai Branch of the People’s Bank of China monitors the implementation of the separate accounting operations of multi-functional free trade accounts and conducts routine supervision of these operations. The Zhuhai Branch also shares relevant monitoring data with the Zhuhai Branch of the State Administration of Foreign Exchange. Pilot banking institutions in the Cooperation Zone shall provide timely and full cooperation with regulatory authorities.
Article 33. The Zhuhai Branch of the People’s Bank of China shall establish an early warning mechanism for abnormal cross-border capital flows. Based on off-site monitoring results and risk assessments, the Zhuhai Branch will issue corresponding risk warnings to banking institutions in the Cooperation Zone and implement appropriate countermeasures.
Article 34. In accordance with macro-prudential management requirements, the Guangdong Branch of the People’s Bank of China shall monitor cross-border capital flows associated with separate accounting operations of multi-functional free trade accounts. Based on observed capital flow trends, the Guangdong Branch shall propose adjustments to macro-prudential adjustment parameters, inflow (outflow) leverage ratios, and other suggestions to the People’s Bank of China.
Article 35. The Guangdong Branch of the People’s Bank of China and the Guangdong Branch of the State Administration of Foreign Exchange shall pursue legal accountability from banking institutions and account holders in the event of major risk events, serious violations of laws and regulations, or failure to cooperate with the People’s Bank of China in implementing macro-prudential management and risk prevention measures.
Chapter 6Supplementary Provisions
Article 36. Any matters concerning the separate accounting operations of multi-functional free trade accounts in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin not addressed in the Measures shall be governed by the relevant regulations governing separate accounting for free trade accounts.
Article 37. The authority to interpret the Measures resides with the Guangdong Branch of the People’s Bank of China.
Article 38.These Measures shall come into effect on May 6, 2024.