Compliance Guidelines:

AML Regulations in China

The major AML regulatory bodies in China are:

People’s Bank of China (PBOC):
As the central bank, the PBOC takes a leading role in formulating financial policies, including AML regulations. It also supervises financial institutions in their AML compliance and conducts AML inspections.

China Banking and Insurance Regulatory Commission (CBIRC):
This entity supervises banks and insurance companies, ensuring their compliance with AML requirements specific to these sectors.

China Securities Regulatory Commission (CSRC):
Responsible for regulating the securities and futures markets in China, the CSRC sets and enforces AML standards for securities companies and other participants in these markets.

 Anti-Money Laundering Law of the People’s Republic of China

Chapter II: Customer Identification

• Article 5: Requires financial institutions to establish a rigorous customer identification system, ensuring that customers are appropriately identified and verified.
• Article 6:Emphasizes that identification is mandatory when establishing business ties with customers, ensuring that potentially risky clients are identified at the outset.
• Article 7: Extends the identification requirements to even non-account holders in specific transactions, emphasizing that one-off or occasional transactions might also pose risks.
• Article 8: Discusses non-face-to-face identification, suggesting that financial institutions must adopt rigorous measures for remote customers to mitigate additional risks.
• Article 9: Mandates that customer data isn’t static; financial institutions must periodically review and update their records.

Chapter III: Record Keeping of Customer Identification and Transaction Data

• Article 10: Imposes an obligation to retain all customer data and their transaction records for a minimum of five years, ensuring that this information is accessible for investigations.
• Article 11: Specifies the exact details to be retained, like transaction amounts, currencies, and counterparties, ensuring comprehensive records.

Chapter IV: Reporting of Large-value and Suspicious Transactions

• Article 12: Introduces the obligation for financial institutions to report transactions exceeding certain thresholds or any transaction that seems suspicious, regardless of its value.
• Article 13: Provides a quantitative basis for what constitutes a “large-value transaction,” although exact thresholds might be further detailed by the PBOC.
• Article 14:Emphasizes the qualitative nature of “suspicious” transactions, suggesting factors like the inconsistency with a customer’s profile as potential triggers.
• Article 15: Clarifies the procedure for reporting, which includes a requirement for timely submission after identifying a suspicious transaction.

Chapter V: Anti-Money Laundering Monitoring and Analysis Center

• Articles 16-19: Established the role of the PBOC’s Anti-Money Laundering Monitoring and Analysis Center, which is the central hub for collecting, analyzing, and disseminating AML data. It also coordinates with international entities.

Chapter VI: Supervision and Regulation

• Article 20: Outlines the supervisory and regulatory powers vested in AML authorities, which include conducting investigations and seeking explanations.
• Article 21: Elaborates on the methods that regulators can employ for oversight, including on-site inspections and data requisitions.
• Article 22: Mentions that breaches of the law will have repercussions, including negative records on institutional and individual credit files.

References

1. Anti-Money Laundering Law of the People’s Republic of China