The State Administration of Foreign Exchange ("SAFE") has recently issued the Measures for Assessment of Compliance and Prudence of Foreign Exchange Business of Banks (the "Measures"), immediately effective from the date of issuance.
The Measures clearly state that the assessment period starts from October 1 of the preceding year till September 30 of the current year, and the assessment consists of the business compliance assessment and the business prudence assessment. Further, the Measures provide that the business compliance of routine foreign exchange business of banks will be assessed by means of two types of indicators, namely the general assessment indicators and the separate assessment indicators for bank headquarters. Business prudence assessment indicators will apply to banks with the full capacity for all behaviors, but not to branches or sub-branches of banks. The foreign exchange regulators will conduct the assessment over banks according to both bank's legal personality and territorial jurisdiction. In addition, the Measures state that foreign exchange regulators will grade the banks under assessment at five different classes, including Class A, Class B+, Class B, Class B- and Class C, according to the final scores banks earn in the assessment, and create the overall assessment report on business compliance and prudence of each bank's foreign exchange business. In conducting assessment over banks, foreign exchange regulators shall timely input the assessment information into the relevant assessment system, and retain the corresponding business records at the same time. Such records should be safekept for a period of 24 months.