Editor’s Note
This article discusses new draft regulations from China’s financial regulators aimed at standardizing customer due diligence and record-keeping for financial institutions. The proposed measures seek to enhance transparency and compliance within the financial sector.
Recently, the People’s Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission jointly released the “Measures for the Management of Customer Due Diligence and the Preservation of Customer Identity Information and Transaction Records by Financial Institutions (Draft for Comments)” (hereinafter referred to as the “Measures”) for public consultation, with the feedback deadline set for September 3. Notably, the “Measures” eliminate the mandatory requirement for individuals to “understand and register the source or purpose of funds” when handling single cash deposit or withdrawal transactions exceeding 50,000 yuan, a significant adjustment that has attracted widespread attention.
The “Measures” propose multiple detailed requirements concerning customer due diligence processes, the preservation of identity information and transaction records, and the identification of beneficial owners in the financial sector, providing clear operational guidance for financial institutions.
It is noteworthy that, compared to the 2022 version of the regulatory rules, the “Measures” delete the provision from the old Article 10, which stated: “When commercial banks, rural cooperative banks, rural credit cooperatives, village and township banks, and other financial institutions handle cash deposit or withdrawal transactions for natural person clients exceeding 50,000 yuan in RMB or the equivalent of 10,000 US dollars in foreign currency, they shall identify and verify the client’s identity, and understand and register the source or purpose of the funds.”
The “Measures” clearly stipulate that policy banks, commercial banks, rural cooperative banks, rural credit cooperatives, village and township banks, and other financial institutions, as well as institutions engaged in remittance business, shall conduct customer due diligence and register the client’s basic identity information, and retain copies or photocopies of the client’s valid identity documents or other identity certificates when providing one-time financial services such as cash remittance, cash exchange, bill cashing, physical precious metals trading, or selling financial products, where the transaction amount is 50,000 yuan or more in RMB or the equivalent of 10,000 US dollars or more in foreign currency.
The formulation of the “Measures” is primarily based on three considerations: first, to implement the “Anti-Money Laundering Law of the People’s Republic of China” and refine the requirements for customer due diligence and the preservation of identity information and transaction records by financial institutions; second, to meet the needs of responding to international anti-money laundering assessments; and third, to enhance the effectiveness of due diligence work by financial institutions.
Prior to the release of the “Measures,” regulatory authorities had already issued intensive anti-money laundering rules for specific sectors. Effective from August 1, the “Measures for the Administration of Anti-Money Laundering and Counter-Terrorist Financing for Precious Metals and Gemstone Practitioners” officially came into force, regulating related work in this field. Earlier, the People’s Bank of China solicited public comments on documents such as the “Notice on Implementing the ‘Measures for the Supervision and Administration of Anti-Money Laundering and Counter-Terrorist Financing of Financial Institutions'” and the “Measures for the Administration of Anti-Terrorist Financing of Social Organizations (Revised Draft for Comments).”
Gao Zhengyang believes that the intensive release of these policies reflects both the continuous improvement of the regulatory system and the refinement of risk prevention and control, enhancing regulatory precision through targeted requirements. It also constructs a grid-based prevention and control layout covering multiple fields such as finance, precious metals, and social organizations, forming a cross-industry risk联防 mechanism. This will drive financial institutions to improve their anti-money laundering compliance capabilities and, in the long run, help enhance their risk management levels, solidifying the stability and sustainability of the financial market.
From an industry perspective, Gao Zhengyang suggests that banks can balance short-term compliance costs with long-term risk prevention and control through technological empowerment and process optimization. This includes developing transaction monitoring systems with intelligent tools to reduce labor costs; implementing tiered management with differentiated measures for high- and low-risk clients to avoid resource waste; and incorporating compliance training into strategy to cultivate复合型 risk control talents.