Anti-money laundering and financial crime prevention

Requirements

What are the main anti-money laundering and financial crime prevention requirements for private banking and wealth management in your jurisdiction?

Financial institutions must report to the People’s Bank of China on the following aspects:

  • an overall summary of the conditions of the work of the anti-money laundering department;
  • conditions of the mechanisms in place;
  • the degree to which they are fulfilling anti-money laundering obligations;
  • the department’s anti-money laundering results; and
  • other situations, questions and suggestions relating to anti-money laundering.

If a financial institution has overseas branches, its headquarters must report to People’s Bank of China or the anti-money laundering authority of the place where the branch is located, on behalf of the branch.

A financial institution shall, according to the Law of the PRC on Anti-money Laundering, establish and improve its internal control system of anti-money laundering, set up a clients’ identity identification system and not provide any service to or have trade with any client who cannot clarify his or her identity or establish any anonymous or pseudonymous account therefor. A financial institution shall establish a special institution of anti-money laundering or designate an internal department to take charge of anti-money laundering.

Where any single transaction handled by a financial institution or the accumulated transaction within a prescribed time limit goes beyond the prescribed sum or where any doubtful transaction is found, it shall be reported to the Anti-Money Laundering Information Centre immediately.

A financial institution shall, according to the requirements for anti-money laundering prevention and supervision, conduct anti-money laundering training and publicity.

Politically exposed persons

What is the definition of a politically exposed person (PEP) in local law? Are there increased due diligence requirements for establishing a private banking relationship for a PEP?

There is no definition of a PEP.

Documentation requirements

What is the minimum identification documentation required for account opening? Describe the customary level of due diligence and information required to establish a private banking relationship in your jurisdiction.

Apart from checking identity documents, such as identification cards, passports or other documents that can certify the identification of a person, financial institutions can use one or more of the following methods to verify the identification of clients:

  • requiring clients to provide other identification documents;
  • rechecking the clients;
  • investigating the clients on the spot;
  • verifying the clients’ identification through the Public Security Bureau or Administration of Industry and Commerce; or
  • another legal method.
Tax offence

Are tax offences predicate offences for money laundering? What is the definition and scope of the main predicate offences?

Tax offences are not predicate offences for money laundering. The predicate offences for money laundering include crimes related to drugs, gangs, terrorism, smuggling, bribery, financial violations and fraud..

Compliance verification

What is the minimum compliance verification required from financial intermediaries in connection to tax compliance of their clients?

In accordance with the Measures on the Administration and Due Diligence Procedures for Non-Residents’ Financial Accounts Information Relating to Tax Matters, for new accounts opened from 1 January 2017, financial institutions are required to identify the tax residency status of the account holder by obtaining a signed standard statement on tax residency status and verifying the reasonableness of the statement. If the account holder is identified as a non-resident individual, the financial institution will collect and report all necessary information.

Liability

What is the liability for failing to comply with money laundering or financial crime rules?

According to the Anti-Money Laundering Law, if financial institutions do not, as the laws and regulations stipulate, set up internal regulation for anti-money laundering, set up departments or designate a special department to take responsibility for anti-money laundering or training of its employees in anti-money laundering procedures, they would be ordered to make amends, and in serious cases, the person who is directly in charge would be given disciplinary punishment by the anti-laundering authority.

Financial institutions may be ordered to make amends, or be fined, with the person who is responsible being directly fined, given a disciplinary punishment or discharged, if any of the following circumstances occur:

  • they do not, as the laws and regulation stipulate, verify the identities of clients;
  • they do not, as the laws and regulation stipulate, keep the identification material and transaction records of clients;
  • they do not, as the laws and regulation stipulate, report on transactions involving large sums of money and dubious transactions;
  • they have any transactions with a client whose identity is unclear, or establish an anonymous or pseudonymous account for a client;
  • they violate the laws and regulations concerning confidentiality;
  • they reject or block any investigations concerning anti-money laundering; or
  • they do not provide all relevant documents for investigation.