PBOC Revises AML Rules to Enhance Supervisory Scope

With continuous innovation in the financial sector and the emergence of new types of financial businesses, it is necessary to improve the scope of AML supervision, the PBOC says.

The PBOC (People’s Bank of China) has issued draft revisions to its 2014 rules for the financial sector on combatting money laundering and terrorism financing.

The revisions are aimed at preventing and defusing financial risks, improving the effectiveness of AML supervision, and improving the level of AML work of financial institutions, the PBOC said.

The central bank highlighted findings from the FATF (Financial Action Task Force), which in 2019 issued its fourth assessment report of China.

The report highlighted a need for China to improve its AML supervision, clarify requirements for financial institutions to implement internal controls and risk management processes, and provide better guidance to the financial sector on its AML obligations.

“In recent years, the domestic and international AML situation has continued to change, international AML requirements have become stricter, and regulatory rules have placed greater emphasis on risk-based supervision,” the PBOC said. “The pressure on AML supervision in various countries has increased, and domestic AML supervision measures need to be further refined.”

“At the same time, with the continuous innovation in the financial sector and the emergence of various new types of financial businesses, it is necessary to improve the scope of AML supervision.”

The new rules will apply to non-bank payment institutions, online microfinance businesses, consumer finance companies, and banks’ wealth management subsidiaries.

The revisions clarify the PBOC’s role in conducting risk assessments of financial institutions and using the results to implement “risk-based supervision”.

They also stipulate that financial institutions should establish internal control systems that are commensurate with money laundering risks they face and their business scale. This includes the establishment of a money laundering risk self-assessment system, AML information systems, and AML/CTF audit mechanisms.

The draft rules, available here, are open for comment until 30 January 2021.

 

 

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