Editor’s Note
This article outlines new anti-money laundering regulations from China’s central bank, requiring precious metals and jewelry businesses to perform due diligence on large cash transactions. The rules aim to strengthen financial oversight and curb illicit fund flows in the sector.
A reporter from China Securities Journal learned on July 2nd that the “Administrative Measures for Anti-Money Laundering and Counter-Terrorist Financing for Precious Metals and Jewelry Industry Institutions” recently issued by the People’s Bank of China (PBOC) stipulates that institutions engaging in cash transactions of 100,000 yuan (including 100,000 yuan) or more in Renminbi or equivalent foreign currency must perform anti-money laundering obligations in accordance with the “Measures”. The “Measures” define precious metals as gold, silver, platinum, etc., and their ingots, standard bars, products, intermediate products, and raw materials after refining. The “Measures” will take effect on August 1st.
The “Measures” require that for customer single or daily cumulative cash transactions of 100,000 yuan (including 100,000 yuan) or more in Renminbi or equivalent foreign currency, institutions should submit a large transaction report to the China Anti-Money Laundering Monitoring and Analysis Center within 5 working days from the date the transaction occurs, in accordance with regulations.
According to the explanatory note accompanying the “Administrative Measures for Anti-Money Laundering and Counter-Terrorist Financing for Precious Metals and Jewelry Industry Institutions (Draft for Comments)” previously released by the central bank, establishing an anti-money laundering system for precious metals and jewelry industry institutions is a practical need for carrying out anti-money laundering supervision in accordance with the law. Based on international experience, anti-money laundering work has gradually extended from financial institutions to specific non-financial industry institutions. To maintain the sustainable and healthy development of the precious metals and jewelry industry and avoid being exploited by illegal elements, the “Measures” stipulate anti-money laundering supervision for institutions based on the money laundering risk profile of the precious metals and jewelry industry.
The “Measures” define precious metals, jewelry, and precious metals and jewelry trading venues. Among them, the “Measures” define jewelry as various raw materials and finished products of natural gemstones such as diamonds and jadeite, as well as jewelry and manufactured physical forms. The “Measures” define precious metals and jewelry trading venues as centralized trading venues established with legal approval, such as the Shanghai Gold Exchange and the Shanghai Diamond Exchange.
The “Measures” propose that institutions should be diligent and responsible, follow the “know your customer” principle, and conduct customer due diligence based on customer characteristics and the nature of transaction activities, as well as money laundering risk conditions, in any of the following circumstances: customer single or daily cumulative cash transactions of 100,000 yuan (including 100,000 yuan) or more in Renminbi or equivalent foreign currency; there are reasonable grounds to suspect that the customer and their transactions involve money laundering activities; there are doubts about the authenticity, validity, and completeness of previously obtained customer identity information.
The “Measures” clarify that institutions must not provide services to or conduct transactions with customers whose identities are unclear or who use others’ identities. If an institution discovers a customer using invalid identity documents, it should immediately suspend the transaction or service and conduct customer due diligence as required. If a customer refuses to cooperate with reasonable customer due diligence measures taken by the institution in accordance with the “Measures”, the institution may, according to prescribed procedures, legally take money laundering risk management measures such as restrictions, refusal, or termination of transactions or services, and submit a suspicious transaction report based on the situation.
Furthermore, the “Measures” propose that institutions should take reasonable measures to regularly assess the money laundering risks faced by the institution and take appropriate control measures and reduce identified money laundering risks based on the risk assessment results. The money laundering risk assessment period should not exceed 3 years. When the institution’s own business activities or the environment undergo significant changes, the institution should promptly conduct a money laundering risk assessment. Before launching new products, new services, or using new technologies, institutions should pay attention to changes in the money laundering risks faced by the institution, conduct money laundering risk assessments, and take appropriate measures to reduce the money laundering risks brought by new products, new services, and new technologies.
