China Takes Significant Step in Anti-Money Laundering and Counter-Terrorist Financing with New Measures
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The People’s Bank of China (PBC) has introduced a set of measures aimed at strengthening anti-money laundering (AML) supervision and practices in the country. The new rules, which take effect from August 1, 2021, are designed to improve AML oversight and prevent financial risks.
Background
The PBC’s move is an important step towards implementing the CPC Central Committee and State Council’s plans to enhance AML systems and mechanisms in China. The new rules follow a risk-based approach and aim to improve supervisory measures and efficiency by assessing money laundering and terrorist financing (ML/TF) risks faced by financial institutions.
Key Measures
The measures specify internal control and risk management requirements for financial institutions, including:
- Self-assessment of ML/TF risks: Financial institutions must conduct regular self-assessments to identify and assess ML/TF risks.
- Establishment of internal controls systems: Institutions must establish internal controls systems and corresponding risk management policies based on risk profiles and business scales.
- Organizational requirements: Financial institutions must have a clear organizational structure, with defined roles and responsibilities.
The rules also clarify requirements for financial institution organization, human resources support, information systems, and auditing mechanisms to prevent AML supervisory risks.
Expanded Scope
The measures apply not only to banks but also to:
- Non-banking payment institutions: Institutions that have already been listed in relevant AML normative documents.
- Online micro-credit companies: Companies that provide credit services online.
- Wealth management subsidiaries of banks: Subsidiaries of banks that offer wealth management services.
This expanded scope aims to address current financial development conditions and major financial risk demands in China.
Implementation
The PBC will continue to implement the new rules and urge financial institutions to improve their AML practices. The bank and its branches will carry out AML duties in a regulated manner to ensure effective ML/TF risk prevention in China.
By implementing these measures, China is taking a significant step towards improving its anti-money laundering and counter-terrorist financing efforts, ensuring the stability of its financial system and reducing the risks associated with ML/TF activities.