China Strengthens AML/CFT Regime with New Guidance

CBIRC has released guidance to help financial institutions improve AML/CFT controls, on the heels of recent news that PBOC is scrapping its approval process for corporate accounts.

The CBIRC (China Banking and Insurance Regulatory Commission) has issued measures (Chinese only) for financial institutions on combatting money laundering, terrorism financing and tax evasion.

The guidance follows a recent announcement from the PBOC (People’s Bank of China) saying it plans to scrap its approval process for opening a corporate bank account nationwide this year. The PBOC warned that some banks might allow corporate accounts to be used illegally, such as for money laundering and terrorist financing activities, and said it would rely on stronger oversight of abnormal accounts and suspicious transactions.

“Anti-money laundering and counter terrorism financing are important guarantees for advancing the modernisation of the national governance system and governance capacity and maintaining economic and social security and stability,” the CBIRC said in a notice.

The new measures mostly cover improvements to internal controls at banking financial institutions, improvements in the supervision mechanism, and clarifications on market access standards – which together establish the basic framework of the financial industry’s AML work.

The term ‘banking financial institutions’ is used to refer to commercial banks, rural cooperative banks, rural credit cooperatives, policy banks, state development banks, and other deposit-taking institutions. Asset management companies, trust companies, enterprise group finance companies, financial leasing companies, auto finance companies, currency brokerages, and consumer finance companies are also included.

“Banking financial institutions should incorporate money laundering and terrorist financing risk management into a comprehensive risk management system in accordance with the risk-based principles,” the CBIRC said. This includes the establishment of sound AML/CTF internal control systems, and a clear division of responsibilities across the board of directors, the board of supervisors, senior management and relevant departments.

The measures also require the preservation of customer identity data and transaction records, with particular regard for large-value and suspicious transactions, which require the implementation of reporting systems. Banking financial institutions should also conduct AML/CFT risk assessments before launching new businesses or applying new technologies.

The rules for market access will require criminal background checks on shareholders, directors and senior management of banking customers. Banks also need to review the legality of the source of the shareholders’ funds.

The CBIRC will strengthen its daily compliance monitoring, supervision and guidance to facilitate the establishment of adequate AML/CFT internal control and compliance systems at banking financial institutions.

To Top