Article 42 Where any institution or individual carries out foreign exchange in and out of the territory of China in violation of provisions, foreign exchange administrative departments shall give it/him a warning and may impose a fine of less than 20 percent of the illegally carried funds. Where provisions of laws and regulations provide that the penalty shall be given by customs, the said provisions shall prevail.

Article 43 Where any institution or individual has acts including borrowing foreign loans, issuing bonds outside China or providing foreign guarantees without approval in violation of provisions on foreign loan administration, foreign exchange administrative departments shall give it/him a warning and impose a fine of less than 30 percent of the illegal funds.

Article 44 Where any institution or individual violates provisions to change the purposes of foreign exchange or foreign exchange settlement funds without approval, foreign exchange administrative departments shall order it/him to make corrections, confiscate illegal proceeds and impose a fine of less than 30 percent of the illegal funds. Under any serious circumstances, a fine of more than 30 percent up to the same amount of the illegal funds shall be imposed.

Where any institution or individual has any acts of illegal use of foreign exchange including use of a foreign currency for pricing and settlement or transfer of foreign exchange out of the territory of China in violation of provisions, foreign exchange administrative departments shall order it/him to make corrections and give it/him a warning, and may impose a fine of less than 30 percent of the illegal funds.

Article 45 Where any institution or individual makes unapproved, disguised or speculative transactions of foreign exchange, or illegally serves as intermediate for foreign exchange transactions where the amount of transacted foreign exchange is large, foreign exchange administrative departments shall give it/him a warning, confiscate illegal proceeds and impose a fine of less than 30 percent of the illegal funds. Under any serious circumstances, a fine of more than 30 percent up to the same amount of the illegal funds shall be imposed. Where any crime is constituted, criminal responsibilities shall be ascertained.

Article 46 Where any institution or individual engages in the settlement and sale businesses of foreign exchange without approval, foreign exchange administrative departments shall order it/him to make corrections and confiscate illegal proceeds, if any. Where the illegal proceeds are over 500,000 yuan, a fine of one to five times of the illegal proceeds shall be imposed; where there is no illegal proceed or the illegal proceeds are less than 500,000 yuan, a fine of 500,000 yuan up to 2 million yuan shall be imposed; under any serious circumstances, relevant competent departments shall order it/him to stop the business for internal rectification or revoke its/his business license. Where any crime is constituted, criminal responsibilities shall be ascertained.

Where any institution or individual engages in other foreign exchange businesses other than the settlement and sale of foreign exchange without approval, foreign exchange administrative departments or financial regulatory departments shall punish it/him in accordance with provisions in the preceding paragraph.

Article 47 Where any financial institution has any of the following circumstances, foreign exchange administrative departments shall order it to make corrections within a time limit, confiscate its illegal proceeds and impose a fine of 200,000 yuan up to 1 million yuan; where it is under any serious circumstances or does not make any correction within the time limit, foreign exchange administrative departments shall order it to stop operating relevant businesses;

(1) Failing to conduct a proper checkup over the accuracy of transaction documents and the consistency of foreign exchange income and expenditure when handling receipt and payment businesses under the current account;

(2) Handling receipt and payment businesses under the capital account in violation of provisions;

(3) Handling foreign exchange settlement and sale businesses in violation of provisions;

(4) Violating provisions of the general position management on foreign exchange businesses; or

(5) Violating the provisions of administration on transactions in foreign exchange market.

Article 48 Where any institution or individual has any of the following circumstances, foreign exchange administrative departments shall order it/him to make corrections and give it/him a warning, and may impose a fine of less than 300,000 yuan on the institution, or a fine of less than 50,000 yuan on the individual:

(1) Failing to collect statistics and report its/his international income and expenditure in accordance with provisions;

(2) Failing to submit materials including financial accounting reports and statistical statements in accordance with provisions;

(3) Failing to submit valid documents in accordance with provisions or the submitted documents are inauthentic;

(4) Violating provisions on the administration of foreign exchange accounts;

(5) Violating provisions on the administration of foreign exchange registration; or

(6) Refusing or hindering foreign exchange administrative departments to carry out legitimate supervisions or investigations.

Article 49 Where any domestic institution violates provisions on foreign exchange administration, besides punishments according to these Regulations, the directly liable person-in-charge or other directly liable persons shall be punished; directors, supervisors, senior managers who bear direct responsibility for the financial institution and other directly liable persons shall be given a warning and imposed a fine of 50,000 yuan up to 500,000 yuan. Where any crime is constituted, criminal responsibilities shall be ascertained.

Article 50 Where any staff member of foreign exchange administrative department practices favoritism and engages in irregularities, abuses his power or neglects his duties, if any crime is constituted, criminal responsibilities shall be ascertained according to law; if no crime is constituted, administrative penalties shall be given according to law.

Article 51 Any party concerned may appeal for administrative reconsideration according to law if it/he does not accept the concrete administrative behaviors by foreign exchange administrative departments. It/he may appeal to the people's court if he does not accept the decision of administrative reconsideration.

Chapter VIII Supplementary Provisions

Article 52 Definitions of the terms in these Regulations are as follows:

(1) Domestic institution refers to state organs, enterprises, public institutions, social organizations, armies, etc. in the territory of the People's Republic of China, except foreign diplomatic and consular organs and representative agencies of international organizations in China.

(2) Domestic individual refers to Chinese citizens and foreigners staying in China for more than one year consecutively, except foreign diplomatic personnel and representatives of international organizations in China.

(3) Current account refers to goods, services, incomes and regularly transferred transactions, etc. involved in balance of international payments.

(4) Capital account refers to transactions involved in balance of international payments which may cause changes to foreign assets and foreign debt level, including capital transfer, direct investment, security investment, derivatives and loans, etc.

Article 53 Where a non-financial institution engages in business of settlement and sale of foreign exchange, it shall be approved by the foreign exchange administrative department of the State Council. Specific administrative measures shall be separately formulated by the foreign exchange administrative department of the State Council.

Article 54 These Regulations shall enter into force as of the date of promulgation.

(Source: www.fdi.gov.cn)