Article 53 A foreign-funded bank shall be cooperative in the supervision and inspection carried out by the banking regulatory agency, and shall not refuse or hamper such supervision and inspection.

Article 54 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall each put into place independent internal control system, risk management system, financial and accounting system, and computer information management system.

Article 55 The chairman of the board of directors and senior executives of a wholly foreign-funded bank established by a foreign bank within the territory of the People's Republic of China, and the senior executives of the same foreign bank's branch engaging in foreign exchange wholesale business shall not hold concurrent positions in each other's organizations.

Article 56 Transactions between a wholly foreign-funded bank established by a foreign bank within the territory of the People's Republic of China and the same foreign bank's branch engaging in foreign exchange wholesale business shall be based on market terms and shall not be more favorable than the terms of the transactions between either entity and its non-related parties. Such foreign bank shall provide full guaranty to the capital transactions between the afore-mentioned wholly foreign-funded bank and the foreign bank's branch.

Article 57 A foreign bank's representative office and its staff shall not engage in any form of operational business activities.

Chapter V Termination and Liquidation

Article 58 Where an operational foreign-funded bank decides to terminate its business activities, it shall apply in writing to the banking regulatory agency of the State Council 30 days prior to the date of termination and, upon examination and approval, effect its dissolution or closure and proceed to liquidation.

Article 59 Where an operational foreign-funded bank falls into insolvency, the banking regulatory agency of the State Council shall have the power to issue an order to suspend its business and clear its liability within a specified period of time. Where, within the specified period of time, such bank recovers its solvency and intends to resume its business, it shall apply in writing to the banking regulatory agency of the State Council for the resumption of its business; where it fails to recover its solvency when the specified time limit is due, it shall effect its liquidation.

Article 60 Where an operational foreign-funded bank is terminated because of dissolution, closure, abolished according to law or declaration of bankruptcy, the liquidation shall be proceeded in accordance with the relevant laws and regulations of the People's Republic of China.

Article 61 Upon completion of its liquidation, an operational foreign-funded bank shall go through procedures for cancellation of registration with the original registration organ within the statutory time limit.

Article 62 Where a foreign bank's representative office terminates its activities at its own discretion, it shall effect its closure upon approval of the banking regulatory agency of the State Council, and shall go through procedures for cancellation of registration with the original registration organ within the statutory time limit.

Chapter VI Legal Liability

Article 63 Where a party, without approval of the banking regulatory agency of the State Council, establishes a foreign-funded bank or illegally engages in the activities within the business scope of a banking institution, the banking regulatory agency of the State Council shall have the power to have such a bank or activities banned. And within five years following the date of the banning, the banking regulatory agency of the State Council shall not accept the application submitted by the said party for establishing a foreign-funded bank. Where a crime is constituted, the criminal liability shall be investigated for according to law. Where no crime is constituted, the banking regulatory agency of the State Council shall confiscate the illegal income and impose a fine of one to five times the amount of the illegal income if the illegal income is more than 500,000 yuan. If there is no illegal income or the illegal income is less than 500,000 yuan, a fine of not less than 500,000 yuan and not more than 2 million yuan shall be imposed.

Article 64 Where an operational foreign-funded bank commits any of the following acts, the banking regulatory agency of the State Council shall order it to make corrections and confiscate its illegal income, if any; if the illegal income is more than 500,000 yuan, a fine of one to five times the amount of the illegal income shall be imposed thereupon; if there is no illegal income or the illegal income is less than 500,000 yuan, a fine of not less than 500,000 yuan and not more than 2 million yuan shall be imposed thereupon. Where the circumstances are extremely serious or the operational foreign-funded bank fails to make corrections within the prescribe time limit, the banking regulatory agency of the State Council may order a suspension of its business for rectification or revoke its financial services permit. Where a crime is constituted, the criminal liability shall be investigated for according to law:

(1) Establishing a branch without approval;

(2) Being modified or terminated without approval;

(3) Engaging in business activities without approval; or

(4) Raising or lowering deposit interest rates or loan interest rates in violation of relevant requirements.

Article 65 Where a foreign-funded bank commits any of the following acts, the banking regulatory agency of the State Council shall order it to make corrections and impose thereupon a fine of not less than 200,000 yuan and not more than 500,000 yuan; where the circumstances are extremely serious or the foreign-funded bank fails to make corrections within the time limit, the banking regulatory agency of the State Council may order a suspension of its business for rectification, revoke its financial services permit, or close its representative office; where a crime is constituted, the criminal liability shall be investigated for according to law:

(1) Failing to comply with relevant provisions on information disclosure;

(2) Refusing or impeding the supervision and inspection by the banking regulatory agency of the State Council;

(3) Providing financial and accounting reports, statements or other data that are false or in which important facts are concealed;

(4) Concealing or destroying the documents, certificates, accounting books, electronic data or other materials needed in the supervision and inspection;

(5) Appointing a director, senior executive or chief representative without verification of the qualification; or

(6) Refusing to implement the special supervisory measures defined in Article 50 of these Regulations.

Article 66 Where an operational foreign-funded bank, in violation of the relevant provisions of these Regulations, fails to submit its financial and accounting reports, statements or other related data within the prescribed time limit, or fails to develop the operating rules or improve relevant management systems, the banking regulatory agency of the State Council shall order it to make corrections within a prescribed time limit, and, impose a fine of not less than 100,000 yuan and not more than 300,000 yuan if the bank fails to do so.

Article 67 Where an operational foreign-funded bank engages in any business, in violation of the provisions of Chapter IV of these Regulations or in serious violation of other prudential business rules, the banking regulatory agency of the State Council shall order it to make corrections and impose a fine of not less than 200,000 yuan and not more than 500,000 yuan; where the circumstances are extremely serious or the bank fails to make corrections within the prescribed time limit, the banking regulatory agency of the State Council may order a suspension of its business for rectification, or revoke its financial services permit.

Article 68 Where an operational foreign-funded bank violates these Regulations, the banking regulatory agency of the State Council shall, in addition to the penalties provided for in Articles 63 to 67 of these Regulations, take the following actions by taking into account the specific circumstances:

(1) Ordering the replacement of the director, senior executive or any other person directly responsible for the violation;

(2) Giving a warning, where the violation does not constitute a crime, to the director, senior executive or any other person directly responsible for the violation, and imposing a fine of not less than 50,000 yuan and not more than 500,000 yuan; or

(3) Disqualifying the director or senior executive directly responsible for the violation from holding any management position within the territory of the People's Republic of China for a specified time limit or for life; or prohibiting the director, senior executive or any other person directly responsible for the violation from engaging in banking business within the territory of the People's Republic of China for a specified time limit or for life.

Article 69 Where a representative office of a foreign bank, in violation of these Regulations, engages in operational business activities, the banking regulatory agency of the State Council shall order it to make corrections, give a warning, confiscate its illegal income, and impose a fine of one to five times the amount of its illegal income where the illegal income is more than 500,000 yuan; or impose a fine of not less than 500,000 yuan and not more than 2 million yuan where there is no illegal income or the illegal income is less than 500,000 yuan; where the circumstances are extremely serious, such representative office shall be closed by the banking regulatory agency of the State Council; where a crime is constituted, criminal liability shall be investigated for in accordance with law.

Article 70 Where a representative office of a foreign bank commits any of the following acts, the banking regulatory agency of the State Council shall order it to make corrections and give a warning, and impose a fine of not less than 100,000 yuan and not more than 300,000 yuan; where the circumstances are serious, its chief representative shall be disqualified from holding the position within the territory of the People's Republic of China for a prescribed time limit, or the bank the office represents shall be required to replace the chief representative; where the circumstances are extremely serious, such representative office shall be closed by the banking regulatory agency of the State Council:

(1) Changing the office premises without approval;

(2) Failing to submit the required documents to the banking regulatory agency of the State Council; or

(3) Violating these Regulations or other requirements prescribed by the banking regulatory agency of the State Council.

Article 71 Where a foreign-funded bank violates other laws and regulations of the People's Republic of China, the case shall be dealt with by the relevant competent organs according to law.

Chapter VII Supplementary Provisions

Article 72 These Regulations apply mutatis mutandis to the banking institutions established in Chinese mainland by financial institutions from the Hong Kong Special Administrative Region, the Macao Special Administrative Region, or Taiwan region. However, if otherwise specially provided by the State Council, those provisions shall prevail.

Article 73 These Regulations shall be effective as of December 11, 2006. The Regulations of the People's Republic of China on Administration of Foreign-Funded Financial Institutions promulgated by the State Council on December 20, 2001 shall be repealed simultaneously.

(Source: www.cbrc.gov.cn)