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China fines Guotai Haitong asset-management unit over offshore QDII rules
The penalty stems from breaches of foreign-exchange rules tied to QDII products sold between 2019 and 2022, involving improper reporting of cross-border transactions, according to Guotai Haitong and SAFE.
An asset-management unit of China brokerage Guotai Haitong has been fined a total of 52.5 million yuan, or about US$7.8 million, in connection with offshore investment activities under the Qualified Domestic Institutional Investor, or QDII, framework, as Beijing tightens scrutiny of capital flows.
SCMP Economy reports that the State Administration of Foreign Exchange, or SAFE, ordered Guotai Haitong Securities Asset Management to pay 25.9 million yuan in fines and forfeit 26.7 million yuan in illegal gains for foreign-exchange rule breaches tied to QDII operations and failures to properly report cross-border transactions. SAFE did not disclose specifics on the underlying transactions in its posted decision.
QDII is designed to let approved Chinese financial institutions raise domestic funds and invest overseas securities within quotas set by regulators, and it is part of China’s managed opening of its capital account. The violations involved multiple QDII products offered between 2019 and 2022, which Guotai Haitong said have since been rectified.
Guotai Haitong said the penalty would not affect its existing QDII qualification or normal operations, according to its interim report released Wednesday.