SAFE Unveils Nine Current-Account FX Facilitation Measures in Draft Rules

On November 2, the State Administration of Foreign Exchange (SAFE) issued the "Notice on Further Improving Foreign Exchange Administration of the Current Account (Draft for Comment)" and opened it for public comment. The notice contains nine current-account facilitation measures and one regulatory requirement.

To support innovative trade development, SAFE plans to roll out a package of facilitation measures — deepening FX facilitation for high-level opening-up in cross-border trade, broadening the scope of FX business for payment institutions in new trade formats, and lowering the threshold for domestic FX settlement in operating lease business — both widening the applicable scenarios, scope and types of business and further reducing corporate settlement and transaction costs.

The notice also requires banks and other institutions handling FX business under its provisions to strictly fulfil due diligence obligations, conduct authenticity and legality reviews, screen out and block abnormal transactions during and after processing, and report in a timely manner.

A SAFE official said the package enriches the supply of FX policy, cultivates new momentum in foreign trade and improves the quality and efficiency of FX support for the steady development of trade.

Broadening FX business for payment institutions in new trade formats

To widen the applicable scenarios, scope and types of business, the notice proposes five measures. Among them, it would extend the FX business scope of payment institutions from e-commerce to cross-border transactions in new trade formats such as market procurement trade and comprehensive foreign trade services.

This means payment institutions, which currently provide FX services to cross-border e-commerce, will be able to offer current-account agency settlement and sale of foreign exchange as well as related payment and receipt services to market entities engaged in market procurement trade, comprehensive foreign trade services and other new trade formats.

The notice would also improve agency handling of personal FX business. On top of the existing arrangement under which individuals may entrust others to handle purchases and sales of foreign exchange, the types of agency business would be broadened to cover FX receipts and payments, domestic FX transfers, cash deposits and withdrawals and other personal FX business handled at banks.

The notice would lower the threshold for domestic FX settlement in operating lease business by removing the cap on the lessee's FX revenue scale and allowing the lessee to purchase foreign exchange to pay rent to the lessor, provided the underlying transaction is genuine and compliant. At the same time, it would expand the scope of receipts and payments on insurance institutions' FX capital application accounts to include external debt and other capital-account FX funds.

To better support foreign exchange needs for international sporting events, the notice specifies that during an event, foreign currency cash deposits and withdrawals by organisers or hosts may be handled directly at banks, and that overseas individuals involved in the event are exempt from submitting documents for each individual current-account FX transaction at banks.

Regarding lower settlement and transaction costs for companies, the notice proposes four measures. It specifies that from January 1, 2027, FX receipt and payment facilitation for high-level opening-up in cross-border trade will be rolled out nationwide and implemented in tandem with the reform of banks' FX business practices, further facilitating corporate cross-border trade settlement.

A SAFE official said the facilitation business is consistent with the overall approach of the FX business practice reform at banks, reflecting the policy orientation of "the more trustworthy, the more convenient; the more compliant, the more supported." The new policy is expected to further facilitate cross-border trade FX receipts and payments and cut costs and raise efficiency for foreign trade companies.

The notice would expand a pilot programme allowing qualified enterprises to settle border trade FX receipts and payments on a net basis. Enterprises registered in nine border provinces and regions including Inner Mongolia, Liaoning and Jilin that participate in facilitation business may settle general trade and small-scale border trade FX receipts and payments with the same overseas counterparty in the neighbouring country on a net basis.

At the same time, to support the insurance industry, the notice would allow insurance institutions to settle cross-border reinsurance business on a net basis.

Net settlement for reinsurance covers reinsurance inward business income, outward business expenditure, insurance claims and reinsurance-related service fees such as commissions and brokerage fees. A SAFE official said the policy, once implemented, will effectively improve settlement efficiency across the industry while reducing interest losses from item-by-item payments and the credit risk that recoverable amounts are not received in time, helping domestic insurers participate more effectively in the international insurance market.

The notice would also improve the administration of corporate trade credit reporting. Most compliant small and medium-sized foreign trade companies would be exempt from submitting trade credit reports, a new balance reporting method would be added, and foreign trade companies with sound internal controls would be allowed to report trade credit balances on a monthly basis.