To standardize the customer due diligence, customer identity information and transaction record preservation behaviors of financial institutions, the People's Bank of China, the National Financial Supervision and Administration Commission and the China Securities Regulatory Commission issued the "Administrative Measures for Customer Due Diligence and Customer Identity Information and Transaction Record Preservation of Financial Institutions (Draft for Comment)" (hereinafter referred to as the "Administrative Measures") on August 4. Further clarify the specific requirements for risk-based customer due diligence.
In recent years, regulatory authorities have found that financial institutions have deficiencies in taking customer due diligence measures that match the risk situation in light of the risk profile. Referring to the international standards for anti-money laundering of the Financial Action Task Force (FATF), there is still a gap between China's specific regulations on simplified due diligence, ongoing due diligence, and beneficial owners for financial institutions and the international standards.
The "One Bank, One Bureau, One Conference" pointed out that formulating and promulgating the "Management Measures" is a requirement for implementing the relevant provisions of the Anti-Money Laundering Law and also a requirement for doing a good job in responding to international anti-money laundering assessment.
The "Administrative Measures" stipulate that financial institutions should be diligent and responsible, follow the principle of "know your customer", identify and take reasonable measures to verify the identities of customers and their beneficial owners, and take corresponding due diligence measures based on the characteristics of customers and the nature and risk status of transaction activities.
During the existence of business relationships, financial institutions should continuously monitor and assess the overall situation and transaction details of their clients, and understand their money laundering risks. Where there is a relatively high risk of money laundering or terrorist financing, corresponding enhanced due diligence measures should be taken. When necessary, money laundering risk management measures that match the risk can be adopted.
The "Administrative Measures" stipulate that when financial institutions have reasonable grounds to suspect that their clients and their transactions are involved in money laundering or terrorist financing; When there are doubts about the authenticity, validity or completeness of the previously obtained customer identity information; When establishing business relations with customers or providing one-time financial services exceeding the prescribed amount, financial institutions shall conduct customer due diligence.
If there are reasonable grounds to suspect that a client is involved in money laundering or terrorist financing, and conducting customer due diligence would lead to a leakage incident, the "Administrative Measures" clearly stipulate that financial institutions may not conduct customer due diligence, but they should submit a suspicious transaction report.
The "Administrative Measures" stipulate that financial institutions shall not provide services or conduct transactions with unidentified clients, shall not open anonymous or pseudonymous accounts for clients, and shall not open accounts for clients who use the identities of others.
For financial institutions and those engaged in foreign exchange business that remit funds to overseas for clients amounting to a single transaction of RMB 5,000 or the equivalent of USD 1,000 or more in foreign currency, the "Administrative Measures" stipulate that the identity of the remitter should be verified to ensure the accuracy of the remitter's information. When a financial institution discovers that a client is suspected of money laundering or terrorist financing, regardless of the amount of funds remitted, it shall take reasonable measures to verify the identity of the remitter.
The "Administrative Measures" emphasize that simplifying due diligence does not mean exempting financial institutions from conducting due diligence on clients. They should identify and verify the client's identity, at least register the client's name or title and other identity information, and retain necessary identity information during the client's due diligence process.