Opening an RMB account in China will take less time for corporates following the abolition of the need to apply for a permit prior to opening a new bank account.
The People's Bank of China ("PBOC") has shortened the time it takes for corporates to open RMB bank accounts in China. On 28 April 2019, it was announced that it is no longer necessary for companies to apply to their local PBOC office for a permit prior to the activation of bank accounts.
The previous system
Until now, it had been necessary for any corporates wishing to open an RMB account in China to make a formal application to the local office of the PBOC and to wait for them to issue an Open Bank Permit to the company. The bank would obtain the Open Bank Permit on the company's behalf and, with permit in hand, the bank could activate the bank account for the company. This imposed an extra layer to the bank account opening process and introduced delays that could have a potential negative effect, as it prevented businesses from commencing trading. By eliminating the need for an Open Bank Permit to be formerly applied for, the new procedure significantly streamlines the process.
The new procedure for opening a bank account
Under the new procedure, a company can go directly to its chosen bank to open an RMB account and the bank will only need to file the bank account information to the PBOC for filing instead of approval formalities to apply for a permit, as previously needed. This entitles the bank to control the bank account opening procedures and may be more flexible for the document quality review.
However, this change does not mean the bank account opening procedure will be simplified, as the bank may be randomly inspected/audited by the PBOC and any non-compliance actions may be challenged/punished by the PBOC. On the other hand, the bank will take more responsibility for the account opening process. To avoid any potential challenge/punishment from the PBOC, the bank will be much more careful with risk control.
The company still needs to follow the bank's process and supply the necessary evidence on individual directors and signatories to meet the banks know your customer (KYC) controls. As part of the bank's revised process, the company may also be required to furnish more detailed documents for filing to the PBOC. That said, different banks have unique processes that can also be complex and time consuming. It is best for new entrants to seek advice from professionals who can help you to identify a suitable bank for the type of business you plan to conduct and guide you through the process.
This is good news for companies and demonstrates the government's intent to simplify what has been considered one of the most complex country environments in which to conduct business. This will hopefully set a precedent for many other aspects of doing business in China to be similarly simplified.
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