China fines Guotai Haitong arm US$7.8m in capital flow crackdown

China's financial regulators have imposed a US$7.8 million penalty on an asset-management arm of Guotai Haitong Securities. The fine, comprising 25.9 million yuan in penalties and 26.7 million yuan in forfeited illegal gains, targets activities related to the company's offshore investment business.

The State Administration of Foreign Exchange (SAFE) cited breaches of foreign-exchange rules governing the Qualified Domestic Institutional Investor (QDII) program and a failure to properly report cross-border transactions. These violations occurred between 2019 and 2022.

Guotai Haitong Securities Asset Management stated in its interim report that the issues have since been rectified and that the penalty will not impact its existing QDII qualification or normal operations. The QDII program is a key component of China's managed approach to opening its capital account, allowing approved institutions to invest domestic funds overseas.

The regulator posted the decision on the website of the Shanghai branch of SAFE, but did not provide specific details about the transactions involved. Guotai Haitong did not immediately respond to a request for comment.