It is reported that recently, the Ministry of Finance issued a notice on accelerating the standardization, intensification, and digitization of bank letters of credit (hereinafter referred to as the "Notice"), stating that it will work with the China Banking and Insurance Regulatory Commission to further promote the standardization, intensification, and digitization of bank letters of credit, and improve audit quality and efficiency.
The Notice states that all accounting firms and banks shall strictly comply with the relevant requirements of the Notice of the Ministry of Finance, the China Banking and Insurance Regulatory Commission on Further Standardizing the Work of Bank Correspondence and Reply, and the Operational Guidelines for Bank Correspondence and Reply Work. They shall handle correspondence business in accordance with the standardized content, format, and procedures of correspondence, strengthen the process control of correspondence, improve the quality of correspondence work, and achieve the standardization of bank correspondence business.
In terms of intensive construction, the Notice requires accounting firms and banks to handle bank letter of credit business in a centralized manner, improve processes, strengthen control, plug loopholes, and ensure the quality of letter of credit information.
Specifically, starting from January 1, 2023, internal specialized agencies (or positions) designated by accounting firms to handle correspondence shall handle correspondence business uniformly and centrally, and project teams or registered accountants shall not send or receive correspondence on their own. Other accounting firms and audit services should achieve bank letter consolidation before December 31, 2023.
Especially, all banking and insurance regulatory bureaus, as well as policy banks, large banks, joint-stock banks, and foreign banks, need to submit their work on centralized processing of letters and certificates to the Regulatory Department of the China Banking and Insurance Regulatory Commission before January 31, 2023. Banks should fulfill their main responsibilities, evaluate and self inspect the implementation and effectiveness of centralized processing of letters of credit in accordance with relevant work requirements. If the centralized processing does not meet regulatory requirements, the bank shall promptly and effectively rectify it, and report the evaluation, self inspection, and rectification situation to the relevant regulatory department. In addition, each banking and insurance regulatory bureau guides industry self regulatory organizations within its jurisdiction to cooperate with the China Banking Association to collect, update, and submit public information on corporate banks within its jurisdiction.
In terms of digital construction, the "Notice" states that if a bank responds to a letter in a digital manner, it shall complete the response within 10 working days from the date of receiving a confirmation letter that meets the requirements. Accounting firms shall properly keep electronic replies in accordance with relevant regulations on audit archives. Banks are not allowed to impose preconditions such as opening bank accounts, online banking, or conducting separate testing with banks on accounting firms that access third-party letter verification platforms.
The Notice emphasizes that digital replies have the same legal effect and evidential power as paper replies. Regardless of whether digital or paper responses are used, banks should strengthen internal auditing and verification, be responsible for the authenticity and accuracy of the response content, and shall not be exempted from liability for any reason or in any way.
