China: SAFE Eases Control Over Cross-Border Security

Last Updated: 2 June 2014
Article by Joe Tam and Irene Lau

Keywords: SAFE, PRC, cross-border security, new regulations

The State Administration of Foreign Exchange of the PRC (SAFE) has recently issued the Provisions on Foreign Exchange Administration of Cross-Border Security and the relating implementation guidelines (collectively the "New Regulations"). The New Regulations are to come into effect on 1 June 2014 and will supersede a series of regulations previously issued by SAFE on cross-border security and introduce sweeping changes.

Key Changes

The existing cross-border security regime which has been in force for around two decades will be completely overhauled by the New Regulations, and the key changes include the following:

  • Abolishing prior SAFE approval and quota requirements for cross-border security;
  • Requiring SAFE registration for two specific types of cross-border security only;
  • Removing eligibility requirements for participants in cross-border security;
  • Validity of cross-border security under PRC law ceasing to be conditional upon obtaining approval from, or registration with, SAFE;
  • Removing SAFE verification requirement for performance of cross-border security.

Types of Cross-border Security

The New Regulations classify cross-border security into three types as follows:

  • Neibaowaidai (内保外贷) (NBWD): security/guarantee provided by an onshore security provider for a debt owing by an offshore debtor to an offshore creditor.
  • Waibaoneidai (外保内贷) (WBND): security/guarantee provided by an offshore security provider for a debt owing by an onshore debtor to an onshore creditor.
  • Other Types of Cross-border Security (其他形式跨境担保): any cross-border security/guarantee other than NBWD and WBND.


  • NBWD (including any subsequent change to its major terms) shall be registered with SAFE within 15 working days of execution of the security document (or 15 working days of the date of the change). In the case where the onshore security provider is a bank, the bank shall report the data of NBWD to SAFE directly. The existing SAFE approval and quota requirements will be removed by the New Regulations.
  • Proceeds of offshore borrowings in a NBWD transaction shall be used by the offshore debtor within its ordinary business scope, and shall not be used for any speculation purpose or be repatriated directly or indirectly to the PRC without SAFE's approval. The existing restrictions imposed by SAFE on the usage of proceeds of offshore borrowings will continue to apply.
  • There will no longer be any shareholding or financial status requirement on the onshore security provider and the offshore debtor for a NBWD transaction. In other words, any onshore entity is free to provide cross-border security for any offshore entity.
  • A PRC individual is allowed to provide cross-border security for offshore borrowing.
  • SAFE approval is no longer required for the onshore security provider to perform cross-border security obligations in a NBWD transaction. That is, the onshore security provider can pay to the offshore creditor direct (by effecting remittance through an onshore bank) where the NBWD has been registered with SAFE. However, any external claim (对外债权) arising from such payment shall be registered by the onshore security provider with SAFE.


  • WBND is permitted under the New Regulations only in the situation where an onshore entity (other than a financial institution) borrows loans (excluding entrustment loans) or obtains committed credits from an onshore financial institution. Previously, except in certain pilot projects for PRC domestic companies which were run by SAFE on a trial basis, only foreign investment enterprises had access to funding using WBND.
  • The onshore creditor has the duty to report the data of WBND to SAFE but no SAFE registration is required to be conducted by the onshore debtor. Basically SAFE follows the existing practice.
  • The debt incurred by the onshore debtor to the offshore security provider which comes into being as a result of realisation or enforcement of cross-border security in a WBND transaction shall be registered with SAFE as short term foreign debt. The outstanding principal amount of such foreign debt cannot exceed the audited net asset value of the onshore debtor for the past year. Any excess over the aforesaid financial limit will be counted as the onshore debtor's foreign debt quota. Previously, the foreign debt so arising would immediately occupy the onshore debtor's borrowing gap.
  • The onshore creditor may receive payment from the offshore security provider directly without the need to go through any SAFE procedure.

Other Types of Cross-border Security

  • For cross-border security which does not constitute NBWD or WBND, there is no longer any SAFE approval, registration or filing requirement, and so cross-border security provided by an onshore entity for its own debt obligations is not required to be registered with SAFE.

No SAFE Formalities for Security Perfection

  • Cross-border security will not be rendered invalid by reason of violation of SAFE regulatory requirements or failure to comply with SAFE approval, registration or filing requirements. Previously, SAFE approval, registration and/or filing were mandatory for validity of cross-border security.


The New Regulations will relax control over cross-border security and fundamentally change the landscape of financing transactions with PRC elements. The changes will definitely be welcomed by financers, particularly those who provide offshore financing under the NBWD regime and those who lend across the border.

Originally published 30 May 2014

Learn more about our Hong Kong office, PRC offices and Banking & Finance practice.

Visit us at

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2014. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.