China will tighten control on bank accounts of international institutions to curb illegal cross-border capital flows, the top currency regulator said yesterday.
The foreign-exchange accounts at domestic banks opened by organizations registered overseas will need to be identified as Non-Resident Accounts, the State Administration of Foreign Exchange said in a draft rule yesterday on its Website.
It's the first time that the forex regulator has issued a rule to regulate forex accounts opened by overseas firms at domestic banks. Previously, overseas firms could only open forex accounts at overseas banks.
China's increasing involvement in globalization has seen an increase in the opening of forex accounts by overseas institutions and requiring the necessity for an industry-wide rule to regulate the issue, the regulator said.
"The lack of regulations in the area can make it easy for illegal activities and could become the channel for illegal capital flow especially amid the financial turmoil," SAFE said.
Transfers between these accounts and those of domestic agencies or individuals should be managed as cross-border transactions, SAFE said.
Account holders won't be allowed to withdraw cash from such accounts or convert foreign currencies into the yuan without the regulator's approval.
Overseas banks have opened nearly 20,000 foreign-currency accounts each year in China, taking the total to more than 100,000 at the end of last year, SAFE said.
SAFE is soliciting public views on the draft until May 19.
(Shanghai Daily May 6, 2009)
