43. Commercial banks shall adopt country risk measurement methods appropriate to the types, exposure degree and complexity of country risk related with their business activities in the PFTZ, covering all major risk exposures and types and applicable in measuring individual and consolidated country-specific risks and measuring country risks with or without risk transfer.

44. Commercial banks shall have in place a country risk assessment system and an internal sovereign risk rating system appropriate to the exposure degree and complexity of country risk related with their business activities in the PFTZ, to conduct risk assessment and rating of every country and region where they have or plan to have business activities.

45. Commercial banks shall properly set country risk limits to on-balance-sheet and off-balance-sheet items and give appropriate authorization to their institutions in charge of the PFTZ-related matters, provided that the country risk exposure monitoring frequency of these institutions is no lower than that of the other institutions of the commercial banks and procedures of limits monitoring, limits breach reporting and approval are in place.

46. Commercial banks shall explicate their country-specific credit policies and management requirements and ensure that the same credit principles are applied inside the PFTZ and in the domestic market outside the PFTZ in terms of credit access, due diligence, credit assessment, and post-loan credit risk monitoring and management.

VII. Legal and Compliance Risk

47. Commercial banks shall, based on the special characteristics of the business activities and financial markets in the PFTZ, develop applicable compliance management policies to ensure that their business practices are in compliance with relevant Chinese and foreign laws, regulations and transaction rules inside and outside the PFTZ, and also develop proper policy schemes, agreements or contracts to avoid any legal and compliance risk.

48. Commercial banks shall, following the principles of “knowing your clients, knowing your business, and due diligence”, establish an effective mechanism of verifying transaction background information and prevent illegal arbitrage and other illegal activities.

49. Commercial banks shall have in place a monitoring mechanism of abnormal fund flows and fulfill their legal obligations in anti-money laundering and counter-terrorist financing, according to the regulatory requirements for deposits and payments in the PFTZ and the characteristics of trade financing.

VIII. Financial Consumer Protection

50. Commercial banks shall develop policy measures to protect the interests of financial consumers and establish a mechanism inclusive of all business process and financial products to ensure adequate protection of financial consumers' rights and timely and effective settlement of their complaints.

51. When recommending financial products to consumers in the PFTZ-related business, commercial banks shall abide by the principle of transparent selling and protect consumers' rights to know and rights of choice. Product risks shall be truly, accurately and fully exposed to consumers, so shall be the channels and standards of information disclosure, to avoid any practices of hiding risks, exaggerating earnings or mandatory transaction.