restructuring. The take-over or restructuring shall be carried out in accordance with applicable laws and administrative regulations.

Article 39 When a banking institution has been found serious violation of laws and regulations, or significant unsafe or unsound practices, thereby seriously threatening financial order and public interests unless it is closed, the banking regulatory authority under the State Council shall have the authority to close the institution in accordance with applicable laws and regulations.

Article 40 In the case of the take-over, restructuring, or closure of a banking institution, the banking regulatory authority under the State Council shall have the authority to require the directors, senior managers and other staff of the banking institution to perform their duties according to the requirements of the banking regulatory authority under the State Council.

In the course of the take-over, restructuring or liquidation after the closure of a banking institution, the banking regulatory authority under the State Council shall have the authority, subject to the approval of its chief responsible person, to take the following measures against the directors and senior managers directly in charge and other staff directly held responsible:

(1) When the departure from the People's Republic of China of the directors and senior managers directly in charge and other staff directly held responsible is likely to jeopardize the national interests, the banking regulatory authority under the State Council may request the border control authority to prevent them from leaving the People's Republic of China; and

(2) To request the judicial authority to prohibit the directors and senior managers directly in charge and other staff directly held responsible from moving or transferring their properties, or establishing other rights on their properties.

Article 41 The banking regulatory authority or its provincial offices shall have the authority, subject to the approval of their chief responsible persons, to inspect the bank accounts of the banking institution suspected in violation of laws and regulations, and the bank accounts of its staff and connected parties, and may, subject to the approval of their chief responsible persons, request the judicial authority to freeze the illegally obtained funds that are suspected to be transferred or concealed.

Article 42 The banking regulatory authority may, subject to approval by the head of the banking regulatory authority at or above the level of districted cities, take the following measures to investigate the institutions and individuals suspected of violating the law during its inspection on banking institutions:

(1) To interview relevant institutions and individuals and require them to provide explanations on relevant matters;

(2) To check and make copies of the documents and materials related to financial records or property ownership records; and

(3) To record and keep a file of the documents and materials that are likely to be removed, concealed, destroyed or falsified.

Where the measures prescribed in the preceding paragraphs are being taken, there shall be no less than two investigators, who shall present their legal certificates and the written notification of investigation. Where there are less than two investigators, or no legal certificates and written notification of investigation are presented, the relevant institutions or individuals shall have the right to refuse the investigation. Where the measures are taken according to law, the relevant institutions or individuals shall be cooperative, truthfully disclose the required information and provide relevant documents and materials, and shall not refuse or hamper the investigation or conceal the information.

Chapter V Legal Liabilities

Article 43 When the supervisory staff of the banking regulatory authority commits any of the following acts, he or she shall be subject to administrative sanctions according to law. If the case constitutes a crime, he or she shall be investigated for criminal liability according to law:

(1) To authorize, in violation of regulations, a banking institution's establishment, changes, termination, business scope or offering of products or services within its business scope;

(2) To conduct on-site examination of banking institutions in violation of regulations;

(3) To fail to report emergency situations in the banking sector in accordance with Article 28 of this Law;

(4) To inspect bank accounts or request freezing of funds in violation of regulations;

(5) To take enforcement actions or penalties against a banking institution in violation of regulations;

(6) To investigate the relevant institutions or individuals against Article 42 of this Law; and

(6) Other acts such as abuse of power and/or neglect of duties.

The supervisory staff of the banking regulatory authority who commits embezzlement, bribery or divulgence of national secrets, trade secrets or personal privacy shall, if the case constitutes a crime, be investigated for criminal liability according to law, and if the case does not constitute a crime, be subject to administrative sanctions according to law.

Article 44 When a banking institution is established, or banking businesses are conducted without the authorization of the banking regulatory authority under the State Council, the banking regulatory authority under the State Council shall have the authority to ban such institution or businesses. If the case constitutes a crime, criminal liability shall be pursued according to law. If the case does not constitute a crime, the banking regulatory authority under the State Council shall confiscate the illegal gains. If the amount of illegal gains exceeds 500,000 yuan, a fine ranging from one to five times the amount of illegal gains shall be imposed. If no illegal gains are involved or the amount of illegal gains is less than 500,000 yuan, a fine ranging from 500,000 yuan to 2 million yuan shall be imposed.

Article 45 When a banking institution commits any of the following acts, the banking regulatory authority under the State Council shall order it to take corrective measures, and, if illegal gains are involved, shall confiscate the illegal gains. If the amount of illegal gains exceeds 500,000 yuan, a fine ranging from one to five times the amount of illegal gains shall be imposed. If no illegal gains are involved, or the amount of illegal gains is less than 500,000 yuan, a fine ranging from 500,000 yuan to 2 million yuan shall be imposed. If the case is particularly serious, or the banking institution fails to make correction within the prescribed period of time, the banking regulatory authority under the State Council may order suspension of business for rectification or revocation of its banking license. If the case constitutes a crime, criminal liability shall be ascertained according to law:

(1) To establish a branch without authorization;

(2) To change or terminate business operations without authorization;

(3) To offer a product or service without approval or filing with the banking regulatory authority under the State Council; and

(4) To raise or lower interest rates on deposits or loans in violation of regulations.

Article 46 When a banking institution commits any of the following acts, the banking regulatory authority under the State Council shall order it to take corrective measures, and concurrently impose a fine ranging from 200,000 yuan to 500,000 yuan. If the case is particularly serious, or the banking institution fails to make correction within the prescribed period of time, the banking regulatory authority under the State Council may order suspension of business for rectification or revocation of its banking license. If the case constitutes a crime, criminal liability shall be ascertained according to law:

(1) To appoint directors or senior managers without the fit and proper test;

(2) To refuse or obstruct the off-site surveillance or on-site examination;

(3) To submit statements, reports, documents or materials that are false or conceal important facts;

(4) To fail to disclose information to the public in accordance with regulations;

(5) To fail to meet prudential rules and regulations with serious consequences; and

(6) To refuse to take measures as required by Article 37 of this law.

Article 47 When a banking institution fails to submit statements, reports, documents or materials in accordance with regulations, the banking regulatory authority shall order it to take corrective measures. If the banking institution fails to make correction within the prescribed period of time, the banking regulatory authority may impose a fine ranging from 100,000 yuan to 300,000 yuan.

Article 48 When a banking institution violates laws, administrative regulations or other state regulations on banking regulation and supervision, the banking regulatory authority may, in addition to the enforcement actions prescribed in Article 44 to Article 47 of this Law, take the following measures depending on the severity of the circumstance:

(1) To order the banking institution to impose disciplinary sanctions on the directors and senior mangers directly in charge and other staff directly held responsible;

(2) If the case does not constitute a crime, to issue a disciplinary warning to the directors and senior managers directly in charge and other staff directly held responsible and concurrently impose on them a fine ranging from 50,000 yuan to 500,000 yuan; and

(3) To disqualify the directors and senior mangers directly in charge as being unfit and improper for a specified period of time or for life, and/or to bar the directors and senior mangers directly in charge and other staff directly held responsible from banking for a specified period of time or for life.

Article 49 Anyone who hampers the lawful inspection or investigation conducted by the staff members of the banking regulatory authority shall be subject to penalties by the public security authority; and if his or her behavior constitutes a crime, he or she shall be investigated for criminal liability according to law.

Chapter VI Supplementary Provisions

Article 50 Where the laws and administrative regulations provide otherwise the regulation and supervision of policy banks and asset management companies established in the People's Republic of China, these provisions shall prevail.

Article 51 Where the laws and administrative regulations provide otherwise the regulation and supervision of the wholly foreign-funded banking institutions, Sino-foreign joint venture banking institutions and branches of foreign banking institutions that are established in the People's Republic of China, these provisions shall prevail.

Article 52 This Law shall enter into effect as of February 1, 2004.

(Source: www.cbrc.gov.cn)