HiTouch, Make Business Easy!

According to an urgent document released by the People's Bank of China, starting from December 1, 2018, China would further strengthen inspection on transfers between company and personal accounts, a new move to support the implementation of the cancellation of issuing Permit for Opening Corporate Bank Account.

Large transfers tend to draw the curiosity and attention of authorities in the tax, law, and public security sectors. Especially under the new regulation of the People's Bank of China. What should you do to prepare for the changes?

STAGE ONE-

Cancellation of issuing Permit for Opening Corporate Bank Account.

August 14, 2018, an announcement about the cancellation of issuing Permit for Opening Corporate Bank Account posted by the State Council unveiled a series of reforms that aim at simplifying the formalities of opening a corporate bank account and improving the China yuan settlement system.

Image:.gov.cn

In order to simplify the formalities of opening a corporate bank account, the work of canceling Permit for Opening Corporate Bank Account must be finished by the end of 2018 in pilot regions. The amendments to China yuan settlement account and its related system must come out in 2019, switching from verifying the bank account opening to putting on record.

In China, a company must have one (and only one) basic account for daily business operations in China, because:

• Cash can only be withdrawn from the basic account

• Salary and bonus payments can only be effected from the basic account

• Only one basic account can be opened by each company, irrespective of how many banks are used. Multiple general accounts can be opened 

• Basic account often acts as a designated account for making tax payments.

This reform means the certificate Permit for Opening Corporate Bank Account is no longer required for a basic account opening.

Under this regulation, local banks have more freedoms and they no longer need the approval from the People's Bank of China to open a basic account for companies, it simplifies certain steps and takes less time in waiting for the approval.

In other words, commercial banks have to be more careful to verify the company's identity, the intention of opening a basic account and whether it is the unique basic account of the company.

The legal representative now is required to have an interview in person when opening a basic account. Not less than two bank staff are required to witness the legal representative signing up related documents. The whole procedure should be recorded by video and audio.

STAGE TWO-

Strengthening inspection of transfers between company and personal accounts.

The central bank stipulated that they would increase inspection to "large transfer" on personal bank from December 1st, 2018.

What is a "large money" transfer?

According to a financial report that was released on July 1, 2017 titled Measures for The Management of Huge Amount Transaction and Suspicious Transaction of Financial Institutions, the fol