Financial Crime World

Financial Institution Risk Assessment Gets Major Boost in China as Measures Take Effect

The People’s Bank of China (PBC) has released the Measures for the Supervision of Anti-Money Laundering and Counter-Terrorist Financing of Financial Institutions, a significant step towards strengthening anti-money laundering (AML) supervision and practices in the country. The measures come into effect on August 1, 2021.

Implementation of AML Arrangements

The release of these measures is an important milestone in implementing the arrangements made by the CPC Central Committee and the State Council to improve AML supervisory systems and mechanisms in China. The focus is on effectively guarding against financial risks through a risk-based supervision approach that further enhances AML supervisory measures and efficiency.

Key Requirements for Financial Institutions

Under the new regulations, financial institutions are required to:

  • Conduct self-assessment of money laundering and terrorist financing (ML/TF) risks
  • Establish internal control systems and corresponding risk management policies based on their risk profiles and business scales
  • Clarify requirements for organization, human resources support, information systems, and auditing mechanisms in the context of AML

Specific Requirements for Overseas Branches

The measures also set out specific requirements for managing overseas branches of financial institutions to prevent AML supervisory risks. Furthermore, non-banking payment institutions listed in relevant AML normative documents will be subject to these provisions. Online micro-credit companies and wealth management subsidiaries of banks are now included as obliged AML entities.

Commitment to Implementation

The PBC has emphasized its commitment to implementing the measures and urging financial institutions to continually improve their AML practices. The bank and its branches will perform AML duties in a regulated manner to ensure effective ML/TF risk prevention in China, with a focus on forestalling and defusing major financial risks.

By implementing these measures, China is taking a significant step towards strengthening its anti-money laundering regime and preventing financial risks.