Contents
The “Administrative Measures for Anti-Money Laundering and Counter-Terrorist Financing Supervision of Financial Institutions” were deliberated and approved at the 3rd executive meeting of the People’s Bank of China in 2021 on April 12, 2021, and are hereby promulgated, to be implemented from August 1, 2021.
Chapter I General Provisions
Article 1 In order to urge financial institutions to effectively fulfill their obligations in anti-money laundering and counter-terrorist financing, regulate the supervision and management of anti-money laundering and counter-terrorist financing, and in accordance with the “People’s Republic of China Anti-Money Laundering Law“, “People’s Republic of China Law of the People’s Bank of China“, “People’s Republic of China Counter-Terrorism Law” and other laws and regulations, these measures are formulated.
Article 2 These measures apply to the following financial institutions lawfully established within the territory of the People’s Republic of China:
(1) Development financial institutions, policy banks, commercial banks, rural cooperative banks, rural credit cooperatives, and village banks;
(2) Securities companies, futures companies, securities investment fund management companies;
(3) Insurance companies, insurance asset management companies;
(4) Trust companies, financial asset management companies, enterprise group finance companies, financial leasing companies, automobile finance companies, consumer finance companies, currency brokerage companies, loan companies, and bank wealth management subsidiaries;
(5) Other financial institutions determined and announced by the People’s Bank of China to fulfill anti-money laundering and counter-terrorist financing obligations.
Non-bank payment institutions, bank card clearing institutions, fund clearing centers, network microloan companies, as well as institutions engaged in foreign exchange business, fund sales business, professional insurance agency, and insurance brokerage business shall be subject to the supervision and management provisions concerning financial institutions in these measures.
Article 3 The People’s Bank of China and its branches shall supervise and manage the anti-money laundering and counter-terrorist financing work of financial institutions in accordance with the law.
Article 4 Financial institutions shall establish and improve internal control systems for anti-money laundering and counter-terrorist financing in accordance with the regulations, assess money laundering and terrorist financing risks, establish risk management mechanisms appropriate to their risk status and business scale, establish anti-money laundering information systems, set up or designate departments and allocate corresponding personnel, and effectively fulfill their anti-money laundering and counter-terrorist financing obligations.
Article 5 Customer identity information and transaction information obtained through the lawful fulfillment of anti-money laundering and counter-terrorist financing responsibilities or obligations shall be kept confidential and shall not be disclosed to third parties except as required by law.
Chapter II Internal Control and Risk Management for Anti-Money Laundering and Counter-Terrorist Financing in Financial Institutions
Article 6 Financial institutions shall establish and improve internal control systems for anti-money laundering and counter-terrorist financing in accordance with the regulations, taking into account the size of their operations and the risks of money laundering and terrorist financing.
Article 7 Financial institutions shall establish a money laundering and terrorist financing risk self-assessment system at the headquarters level, assess money laundering and terrorist financing risks regularly or irregularly, and within 10 working days from the date of approval by the board of directors or senior management, submit the self-assessment report to the People’s Bank of China or its local branches.
The self-assessment of money laundering and terrorist financing risks by financial institutions shall be adapted to the size of their operations and business characteristics, fully consider the types of risk factors such as customers, regions, businesses, and transaction channels, and absorb and apply national anti-money laundering and terrorist financing risk assessment reports, regulatory authorities, and self-discipline organization guidelines, etc. Financial institutions should conduct money laundering and terrorist financing risk assessments before adopting new technologies, launching new businesses or products, or when facing significant changes in money laundering or terrorist financing risks.
Financial institutions shall regularly review and continuously optimize the work processes and indicator systems for money laundering and terrorist financing risk assessment.
Article 8 Financial institutions shall, based on the size of their operations and the identified money laundering and terrorist financing risk status, with the approval of the board of directors or senior management, formulate corresponding risk management policies and adjust them in a timely manner according to changes in risk status and the implementation of control measures.
Financial institutions shall incorporate money laundering and terrorist financing risk management into their comprehensive risk management systems, covering all business activities and management processes; for identified higher-risk situations, they shall take strengthened measures to manage and reduce risks; for identified lower-risk situations, simplified measures may be adopted; where risks exceed the risk control capabilities of financial institutions, business relationships shall not be established with customers or transactions conducted; if business relationships have already been established, transactions shall be suspended and consideration given to submitting suspicious transaction reports, and if necessary, terminating business relationships.
Article 9 Financial institutions shall establish special departments or designate internal departments to take the lead in conducting anti-money laundering and counter-terrorist financing management work.
Financial institutions shall clarify the anti-money laundering and counter-terrorist financing responsibilities of the board of directors, board of supervisors, senior management, and relevant departments, establish corresponding performance assessment and reward and punishment mechanisms.
Financial institutions shall appoint or authorize a senior management personnel to take the lead in anti-money laundering and counter-terrorist financing management work, and take reasonable measures to ensure their independent performance of work and full access to the authority and resources necessary for their duties.
Financial institutions shall allocate sufficient anti-money laundering positions according to the size of their operations, money laundering and terrorist financing risk status, and business development trends, take appropriate measures to ensure that the qualifications, experience, professional quality, and professional ethics of anti-money laundering positions meet the requirements, and formulate continuous anti-money laundering and counter-terrorist financing training plans.
Article 10 Financial institutions shall establish and improve relevant information systems according to the needs of anti-money laundering and counter-terrorist financing work, and optimize and upgrade them in a timely manner according to changes in risk status, the needs of anti-money laundering and counter-terrorist financing work, and the requirements of information systems.
Article 11 Financial institutions shall establish an anti-money laundering and counter-terrorist financing audit mechanism and review the formulation and implementation of internal control systems for anti-money laundering and counter-terrorist financing through internal audit or independent audit. Audits shall follow the principle of independence, cover domestic and foreign branches, and subsidiary institutions, and the scope, methods, and frequency of audits shall be adapted to the size of the institution’s operations and the risks of money laundering and terrorist financing. Audit reports shall be submitted to the board of directors or its authorized special committees.
Article 12 Financial institutions shall establish unified arrangements for anti-money laundering and counter-terrorist financing mechanisms at the headquarters level, including systems and procedures for conducting customer due diligence, managing money laundering and terrorist financing risks, and sharing information on anti-money laundering and counter-terrorist financing, and ensure that all branches and subsidiary institutions effectively implement them in accordance with their own business characteristics.
Financial institutions shall provide information in accordance with the law and prevent information leakage in sharing and using anti-money laundering and counter-terrorist financing information.
Article 13 Financial institutions shall require their overseas branches and subsidiary institutions to comply with these measures within the scope permitted by the laws of the host country (region); where stricter requirements are imposed by the host country (region), they shall comply with them.
If the requirements of these measures are stricter than the relevant regulations of the host country (region), but the laws of the host country (region) prohibit or restrict the implementation of these measures by overseas branches and subsidiary institutions, financial institutions shall take appropriate supplementary measures to address money laundering and terrorist financing risks and report to the People’s Bank of China.
Article 14 Financial institutions shall, in accordance with the regulations, fulfill obligations such as customer due diligence, retention of customer identity information and transaction records, reporting of large-value transactions, and suspicious transactions, in combination with the requirements of internal control systems and risk management mechanisms.
Article 15 Financial institutions shall report anti-money laundering and counter-terrorist financing work information to the People’s Bank of China in accordance with its regulations. Financial institutions shall be responsible for the authenticity, completeness, and effectiveness of the relevant information.
Article 16 Financial institutions with overseas branches or subsidiary institutions shall, at the headquarters level in China, report annually to the People’s Bank of China or its local branches on the supervision of anti-money laundering and counter-terrorist financing of their overseas branches or subsidiary institutions by the host country (region).
Article 17 Financial institutions shall report to the People’s Bank of China or its local branches in a timely manner in accordance with the regulations if the following circumstances occur:
(1) Formulation or revision of major internal control systems for anti-money laundering and counter-terrorist financing;
(2) Adjustment of senior management personnel, leading management departments, or heads of departments responsible for anti-money laundering and counter-terrorist financing work;
(3) Occurrence of major risk events related to anti-money laundering and counter-terrorist financing work;
(4) Overseas branches and subsidiary institutions are subject to law enforcement inspections, administrative penalties, criminal investigations related to anti-money laundering and counter-terrorist financing conducted by local regulatory authorities or judicial authorities, or other major risk events;
(5) Other matters requested to be reported by the People’s Bank of China.
Chapter III Supervision and Management of Anti-Money Laundering and Counter-Terrorist Financing
Article 18 The People’s Bank of China and its branches shall follow the principles of risk-based and entity-based supervision, reasonably use various supervisory methods, and achieve effective supervision of different types of financial institutions.
The People’s Bank of China and its branches may report to the financial supervision and management agencies of the State Council or their dispatched agencies on the supervision of anti-money laundering and counter-terrorist financing of financial institutions.
Article 19 According to the needs of fulfilling the responsibilities of anti-money laundering and counter-terrorist financing, the People’s Bank of China and its branches may conduct law enforcement inspections on the compliance of financial institutions with anti-money laundering and counter-terrorist financing obligations in accordance with the prescribed procedures.
The People’s Bank of China and its branches may conduct law enforcement inspections on financial institutions supervised and managed by their subordinate institutions for anti-money laundering and counter-terrorist financing, and may authorize subordinate institutions to inspect financial institutions supervised and managed by superior institutions.
Article 20 The People’s Bank of China and its branches shall conduct law enforcement inspections of anti-money laundering and counter-terrorist financing in accordance with the current regulations on anti-money laundering and counter-terrorist financing, and organize implementation according to the relevant procedures for law enforcement inspections of the People’s Bank of China.
Article 21 The People’s Bank of China and its branches shall conduct law enforcement inspections in a standardized and effective manner according to the relevant procedures for law enforcement inspections, focusing on strengthening the supervision and management of the following institutions:
(1) Institutions involved in money laundering and terrorist financing cases; (2) Institutions with high risks of money laundering and terrorist financing; (3) Institutions where significant violations or irregularities are discovered through daily supervision, reporting, and complaints; (4) Other institutions that should be subject to key supervision.
Article 22 When the People’s Bank of China and its branches enter financial institutions for anti-money laundering and counter-terrorist financing inspections, they may inquire financial institution staff according to regulations, require them to explain regulatory matters, review, duplicate documents, materials, and seal documents and materials that may be transferred, concealed, or destroyed; and inspect the use of information technology, digital management of business data, and systems for managing money laundering and terrorist financing risks by financial institutions.
Article 23 The People’s Bank of China and its branches shall evaluate the establishment and implementation of anti-money laundering and counter-terrorist financing systems of financial institutions based on the information on anti-money laundering and counter-terrorist financing work submitted by financial institutions, combined with other information obtained during routine supervision.
Article 24 In order to effectively implement risk-based supervision, the People’s Bank of China and its branches shall, based on the assessment of money laundering and terrorist financing risks at the national, regional, and industry levels, conduct risk assessments of financial institutions on the basis of collecting information on anti-money laundering and counter-terrorist financing from financial institutions, and timely and accurately grasp the money laundering and terrorist financing risk situations of financial institutions.
Article 25 In order to understand the money laundering and terrorist financing risk situations of financial institutions, the People’s Bank of China and its branches may conduct on-site assessments of money laundering and terrorist financing risks of financial institutions.
The People’s Bank of China and its branches shall fill out the “Anti-Money Laundering Supervision Approval Form” (Attachment 1) and “Anti-Money Laundering Supervision Notice” (Attachment 2) when conducting on-site risk assessments, and after approval by the president (director) or deputy president (deputy director) in charge of the business (business management department) of the bank, deliver the “Anti-Money Laundering Supervision Notice” to the financial institutions to be assessed at least 5 working days in advance.
The People’s Bank of China and its branches may require the financial institutions being assessed to provide necessary data and information, and may collect on-site the information needed for the assessment.
During on-site risk assessments, the anti-money laundering personnel of the People’s Bank of China and its branches shall not be fewer than 2 persons and shall present valid credentials.
After the on-site risk assessment is completed, the People’s Bank of China and its branches shall issue the “Anti-Money Laundering Supervision Opinion” (Attachment 3) and provide feedback on the risk assessment conclusions and problems discovered to the financial institutions being assessed.
Article 26 According to the compliance and risk situation of financial institutions, the People’s Bank of China and its branches may take supervisory prompts, interviews, or supervisory visits. If it is found during the supervision process that a financial institution has high money laundering and terrorist financing risks or is suspected of violating anti-money laundering and counter-terrorist financing regulations, the People’s Bank of China and its branches shall promptly conduct law enforcement inspections.
Article 27 If a financial institution has hidden risks of money laundering and terrorist financing or obvious deficiencies in anti-money laundering and counter-terrorist financing work that need attention, with the approval of the person in charge of the anti-money laundering department of the People’s Bank of China or its branches, the financial institution may be issued an “Anti-Money Laundering Supervision Warning Letter” (Attachment 4), requiring it to take necessary control measures and urging it to rectify.
The financial institution shall, within 20 working days from the date of receiving the “Anti-Money Laundering Supervision Warning Letter,” make a written reply after being signed by the person in charge of anti-money laundering and counter-terrorist financing work of the institution; if it cannot reply in a timely manner, with the consent of the People’s Bank of China or its local branches, it can reply within an extended time limit.
Article 28 According to the needs of fulfilling the responsibilities of anti-money laundering and counter-terrorist financing, the People’s Bank of China and its branches may interview directors, supervisors, senior management personnel, or department heads of financial institutions on important issues such as inadequate performance of anti-money laundering and counter-terrorist financing obligations or outstanding risk events.
Article 29 Before conducting interviews, the People’s Bank of China and its branches shall fill out the “Anti-Money Laundering Supervision Approval Form” and “Anti-Money Laundering Supervision Notice.” Interviews with directors, supervisors, senior management personnel of financial institutions shall be approved by the president (director) or deputy president (deputy director) in charge of the business (business management department) of the bank; interviews with department heads of financial institutions shall be approved by the person in charge of the anti-money laundering department of the bank (business management department).
The “Anti-Money Laundering Supervision Notice” shall be delivered to the institution to be interviewed at least 2 working days in advance. In special circumstances where immediate interviews are necessary, the “Anti-Money Laundering Supervision Notice” shall be delivered at the interview site.
During interviews, the anti-money laundering personnel of the People’s Bank of China and its branches shall not be fewer than 2 persons. After the interview, the “Anti-Money Laundering Interview Record” (Attachment 5) shall be filled out and signed by the person being interviewed.
Article 30 In order to understand and verify the implementation of anti-money laundering and counter-terrorist financing policies of financial institutions and the rectification of supervisory opinions, the People’s Bank of China and its branches may conduct supervisory visits to financial institutions.
Article 31 Before conducting supervisory visits, the People’s Bank of China and its branches shall fill out the “Anti-Money Laundering Supervision Approval Form” and “Anti-Money Laundering Supervision Notice,” which shall be approved by the president (director) or deputy president (deputy director) in charge of the business (business management department) of the bank.
The “Anti-Money Laundering Supervision Notice” shall be delivered to the financial institution at least 5 working days in advance. In special circumstances where immediate supervisory visits are necessary, the “Anti-Money Laundering Supervision Notice” shall be delivered upon entering the financial institution’s premises.
During supervisory visits, the anti-money laundering personnel of the People’s Bank of China and its branches shall not be fewer than 2 persons and shall present valid credentials.
The People’s Bank of China and its branches shall keep records of supervisory visits and may issue the “Anti-Money Laundering Supervision Opinion” if necessary.
Article 32 The People’s Bank of China and its branches shall continuously track the rectification of problems discovered during supervision by financial institutions, and if financial institutions fail to reasonably formulate rectification plans or effectively implement rectification, they may initiate law enforcement inspections or take further supervisory measures.
Article 33 If the branches of the People’s Bank of China impose administrative penalties on branches of financial institutions in accordance with the law, or if they discover significant problems or systemic defects involving the headquarters of financial institutions during supervision, they shall promptly copy the penalty decisions or supervisory opinions to the People’s Bank of China or the branches of the People’s Bank of China where the headquarters of the financial institutions are located.
Article 34 If the personnel of the People’s Bank of China and its branches conducting supervision violate the prescribed procedures or exceed their authority in implementing supervision, financial institutions have the right to refuse or raise objections. Financial institutions have the right to raise defenses against the illegal or irregular issues raised by the People’s Bank of China and its branches, and if they have reasonable grounds, the People’s Bank of China and its branches shall adopt them.
Chapter IV Legal Liabilities
Article 35 Personnel of the People’s Bank of China and its branches engaged in anti-money laundering work who violate the relevant provisions of these Measures shall be punished in accordance with Article 30 of the Anti-Money Laundering Law of the People’s Republic of China.
Article 36 If financial institutions violate the relevant provisions of these Measures, they shall be handled by the branches of the People’s Bank of China at or above the municipal level in accordance with Articles 31 and 32 of the Anti-Money Laundering Law of the People’s Republic of China; different situations shall be handled differently, and suggestions shall be made to the financial supervision and management agencies of the State Council for handling in accordance with the law.
If a county (city) branch of the People’s Bank of China finds that a financial institution has violated these regulations, it shall report to its superior branch, which shall handle the matter or make suggestions in accordance with the preceding paragraph.
Chapter V Supplementary Provisions
Article 37 These Measures shall apply to financial groups in accordance with the provisions of Article 9(4), and Articles 11 to 13.
Article 38 These Measures shall be interpreted by the People’s Bank of China.
Article 39 These Measures shall come into force on August 1, 2021. In cases where the anti-money laundering and counter-terrorist financing regulations before the implementation of these Measures are inconsistent with these Measures, these Measures shall be followed. The “Administrative Measures for Anti-Money Laundering Supervision of Financial Institutions (Trial)” (Yin Fa [2014] No. 344) shall be repealed simultaneously.
Disclaimer: The regulation of the law in China is translated by GWBMA for reference only. There may be different interpretations of the Chinese version.
