The People´s Bank of China Decree No.1 [2006]
In line with the
Law of the People´s Republic of China on Anti-Money Laundering, the Law
of the People´s Republic of China on the People´s Bank of China and other relevant
laws and regulations, the People´s Republic of China has formulated the
Rules for Anti-money Laundering by Financial Institutions. The Rules,
adopted at the 25th Governor´s Meeting on November 6, 2006, is hereby promulgated and shall enter into force as
of January
1, 2007.
Zhou Xiaochuan
Governor of the People's Bank of China
November 14, 2006
The Rules for Anti-money Laundering by
Financial Institutions
Article 1 These Rules
are formulated in line with the Law of the People´s Republic of China on
Anti-Money Laundering, the Law of the People´s Republic of China on the
People´s Bank of China and other relevant laws, administrative rules and
regulations with a view to prevent money laundering, standardize anti-money
laundering regulatory activities and anti-money laundering activities of
financial institutions so as to safeguard the order of financial industry.
Article 2 These Rules are applicable to the following
financial institutions legally established within the territory of the People´s
Republic of China:
(1)
commercial banks, city
credit cooperatives, rural credit cooperatives, postal savings institutions and
policy banks;
(2)
securities companies, future
brokerage companies and fund management companies;
(3)
insurance companies and
insurance asset management companies;
(4)
trust and investment companies,
financial asset management companies, finance companies, financial leasing companies,
auto finance companies and money brokerage companies;
(5)
other financial
institutions specified and announced by the People´s Bank of China.
Articles in these Rules
on anti-money laundering management and supervision over financial institutions
are applicable to institutions involved in business such as currency exchange,
payment and settlement, and fund sales.
Article 3 The
People´s Bank of China, as the competent administrative authority for
anti-money laundering under the State Council, shall supervise and manage the
anti-money laundering work of financial institutions according to laws. The
China Banking Regulatory Commission, China Securities Regulatory Commission,
and China Insurance Regulatory Commission shall each undertake anti-money
laundering supervision and management responsibilities with in its competence.
The People´s Bank
of China should cooperate with relevant agencies and institutions under the
State Council and law enforcement agencies in fulfilling the obligations of
anti-money laundering.
Article 4 The People´s Bank of China, as authorized
by the State Council, participates in international anti-money laundering
cooperation on behalf of the People´s Republic of China.
The People´s Bank of China can establish anti-money laundering cooperation
mechanisms with other countries and regions, and conduct cross-border anti-money
laundering supervision and management.
Article 5 The People´s Bank of China undertakes the following
anti-money laundering supervision and management responsibilities according to
law:
(1)
To stipulate anti-money
laundering regulations for financial institutions solely or jointly with the
China Banking Regulatory Commission, the China Securities Regulatory Commission
and the China Insurance Regulatory Commission;
(2)
To monitor fund flow in
both RMB and foreign currencies for anti-money laundering purposes;
(3)
To supervise and
inspect the fulfilling of anti-money laundering obligations by financial
institutions;
(4)
To investigate suspicious
transactions within its competence;
(5) To report
transactions suspected of money laundering crime to law enforcement agencies;
(6) To exchange
information and documents relevant to anti-money laundering with overseas
anti-money laundering institutions in line with relevant laws and administrative
regulations;
(7) And other
responsibilities as defined by the State Council.
Article 6 The China Anti-Money Laundering
Monitoring and Analysis Center, established
by the People´s Bank of China, shall undertake the following responsibilities according
to laws:
(1)
To receive and analyze
reports of large-value transactions and suspicious transactions both in RMB and
foreign currencies;
(2)
To establish a national
anti-money laundering database and properly store large-value and suspicious
transaction reports submitted by financial institutions;
(3)
To report analysis
results to the People´s Bank of China;
(4)
To require financial
institutions to promptly supplement and revise reports of large-value
transactions and suspicious transactions in RMB and foreign currencies;
(5)
To exchange relevant
information and materials with foreign institutions with authorization of the
People´s Bank of China;
(6)
And other
responsibilities as specified by the People´s Bank of China.
Article 7 The People´s Bank of China and its staff
shall keep all information obtained in fulfilling its anti-money laundering
responsibilities confidential, and must not disclose to outsiders in violation
of regulations.
The China
Anti-Money Laundering Monitoring and Analysis Center and its staff shall keep confidential
information on clients´ identities, large-value and suspicious transactions
obtained while legally discharging the anti-money laundering responsibilities;
unless otherwise specified by law, such information shall not be disclosed to
any other organization or individual.
Article 8 Financial institutions and their branch
offices shall establish a sound anti-money laundering internal control system,
establish a specialized unit or designate a unit to be responsible for
anti-money laundering tasks, formulate internal operational procedures and
control measures for anti-money laundering tasks and carry out staff training
on anti-money laundering so as to strengthen their working capacities.
Responsible
persons of financial institutions and their branch offices shall take responsibility
in effective operation of the anti-money laundering internal control system.
Article 9 Financial institutions shall establish and
implement a customer identification system according to rules and regulations.
(1)
To identify the
identity of a customer who requests to establish business relations or requires
occasional financial services above the prescribed amount by requiring the
customer to present authentic and valid identity card or other identity
documents, verifying and registering such documents and timely updating any
change in a customers´ identity information;
(2)
To understand the
purpose and nature of customer´s transaction and effectively identify
beneficiaries of the transaction in line with relevant rules and regulations;
(3)
To re-identify a
customer´ s identity when detecting any abnormal phenomenon in the process of
business operation or suspecting the authenticity, validity and integrity of
customer´s identity documents obtained previously.
(4)
To make sure that an
overseas financial institution with which it has correspondent or similar
relationship effectively conduct customer identification and that it can obtain
a customer´s identity information from such overseas financial institutions.
The provisions on implementation of the afore-mentioned
shall be stipulated by the People´s Bank of China along with China Banking
Regulatory Commission, China Securities Regulatory Commission and China
Insurance Regulatory Commission.
Article 10 Financial
institutions shall properly keep customers´ identity records and transaction
information such as a transaction´s statistics, vouchers and accounting
materials.
The provisions on
implementation of the afore-mentioned shall be stipulated by the People´s Bank
of China along with the China Banking Regulatory Commission, China Securities
Regulatory Commission and China Insurance Regulatory Commission.
Article 11 Financial institutions shall report
to the China Anti-Money Laundering Monitoring and Analysis Center large-value and suspicious transactions
denominated both in RMB and foreign currencies in line with relevant rules and
regulations.
The provisions on
implementation of the afore-mentioned shall be stipulated by the People´s Bank
of China.
Article 12 The People´s Bank of China along with the
China Banking Regulatory Commission, China Securities Regulatory Commission and
China Insurance Regulatory Commission shall guide the financial sector self-disciplinary
organizations to stipulate guiding principles for sector specific anti-money
laundering work.
Article 13 When discovering any suspected crime in
carrying out its anti-money laundering responsibilities, a financial
institution shall promptly report in a written form to the local branch office
of the People´s Bank of China and the public security agency.
Article 14 Financial
institutions and their staff shall assist and cooperate with, according to
provisions of laws, judicial and administrative law enforcement agencies in
their anti-money laundering activities.
The overseas
branches and subsidiaries of financial institutions shall abide by the laws and
provisions of the host country on anti-money laundering, and assist and cooperate
with the national or regional anti-money laundering agency in their anti-money
laundering work.
Article 15 Financial
institutions and their staff shall keep confidential customer identity material
and transaction information acquired when fulfilling their anti-money
laundering obligations; and shall provide such material and information to
other institution or individual in strict accordance with relevant laws.
Financial
institutions and their staff shall keep confidential information of their
anti-money laundering work such as reporting of suspicious transactions,
cooperation with the People´s Bank of China in suspicious transaction
investigation, and shall not provide such information to their customers or
other individuals in violation of regulations.
Article 16 Financial institutions and
their staff shall report large-value and suspicious transactions in accordance
with law and enjoy legal protection in such reporting.
Article 17 Financial
institutions shall submit, in accordance with regulations issued by the People´s
Bank of China, anti-money laundering statistical reports, information and
material, and the anti-money laundering related content in their audit report.
Article 18 The People´s Bank
of China and its branch offices may take the following measures of anti-money
laundering on-site examination as needed in the undertaking of its anti-money
laundering responsibilities:
(1)
To enter the premise of
a financial institution to conduct on-site examination;
(2)
To inquire staff of the
financial institution and require explanation and clarification with regard to
the matter under examination;
(3)
To examine and make a
copy of the document and material related to the matter under examination, and
seal up for keeping the document and material that are at risk of being transferred,
destroyed, concealed or tampered with;
(4)
To examine the computer
system that the financial institution uses to manage its business statistics.
Prior to an
on-site examination, the People´s Bank of China or its branch offices shall
fill in an application form for on-site examination, specify the institution to
be examined, the content and intended time of examination and conduct the
examination after approval by the responsible person of the People´s Bank of
China, or its branch offices.
An on-site
examination shall be conducted by at least two examiners, with the presentation
of a law-enforcement warrant and an examination notice. In the case that less
than two examiners show up for an on-site examination, or no law-enforcement
warrant or examination notice is presented, a financial institution has a right
to refuse examination.
After the
completion of an on-site examination, the People´s Bank of China, and its
branch offices shall produce an on-site examination opinion, affix the official
seal on and deliver it to the examined institution. The content of an on-site
examination opinion shall include a description of the examination, assessment,
and advice on the necessary improvement and measures.
Article 19 The People´s Bank
of China and its branch offices may, as needed in the undertaking of its
anti-money laundering responsibilities, initiate a conversation with member(s)
of the Board of directors or senior management member(s) of a financial
institution and request the person(s) to explain major matters of the financial
institution in fulfilling its anti-money laundering obligations.
Article 20 The People´s Bank
of China conducts an on-site examination over a financial institution, and when
necessary, may inform the China Banking Regulatory Commission, the China
Securities Regulatory Commission or the China Insurance Regulatory Commission
of the examination.
Article 21 When the People´s
Bank of China or its provincial branch offices finds that a suspicious
transaction needs investigation or verification, it can request from the
financial institution information of the customer account(s) involved in the
transaction, record of the transaction and other related material. The
financial institution shall provide cooperation.
The above-mentioned
People´s Bank of China or its provincial branch offices include the
headquarters, Shanghai Head Office, branches, operations offices, sub-branches
in provincial capitals and sub-provincial cities.
Article 22 In its investigation of a suspicious transaction, the
People´s Bank of China or its provincial branch offices can request relevant
staff of a financial institution to provide information; examine and make a
copy of the account information of the customer under investigation, transaction
record and other relevant material; and seal up for keeping the document and
material that are at risk of being transferred, destroyed, concealed or
tampered with.
At least two
investigators shall take part in an investigation of a suspicious transaction,
and present a law enforcement warrant and an investigation notice issued by the
People´s Bank of China or its provincial branch offices. Examining, copying,
and sealing up for keeping customer account information, transaction record and
other relevant material shall be approved by the responsible person of the
People´s Bank of China or its provincial branch offices. In the case that
investigators violate the prescribed procedures, a financial institution has a
right to refuse the investigation.
An enquiry record
shall be made for the enquiry, and shall be verified by the enquired. In the
case that the record contains omission or errors, the enquired can request
inclusion of the omission and corrections. The enquired shall sign his or her
name or affix personal seal on the enquiry record after verification; the
investigators shall also sign their names on the enquiry record.
When sealing up
for keeping documents and materials, investigators shall check and count them
jointly with the financial institution staff present at the investigation, and
produce on the spot a list in two copies, both to be signed or affixed a seal
by the investigators and the financial institution staff present at the
investigation, one to be kept by the financial institution and one to be kept
in the investigation file of the People´s Bank of China.
Article 23 In the case that money-laundering suspicions cannot be
removed upon the completion of investigation, the case shall be immediately
reported to law enforcement agency with proper jurisdiction. In the case that a
customer wants fund in the account involved in the investigation to be
transferred abroad, the financial institution shall immediately report to the
local branch office of the People´s Bank of China. With approval of its
responsible person, the People´s Bank of China can take a temporary freezing
measure, and inform the financial institution in writing, which shall
immediately execute the measure upon receiving the notice.
When the law
enforcement agency deems it necessary to continue the freezing after it
receives the reported case, the financial institution shall provide cooperation
upon receiving the continued freezing notice from the law enforcement agency.
In the case that the law enforcement agency deems it not necessary to continue
the freezing, the People´s Bank of China shall immediately inform the financial
institution in writing to lift the temporary freezing after it receives the
notice from the law enforcement agency.
A temporary
freezing shall not exceed 48 hours. In the case that no notice on continued
freezing is received from the law enforcement agency within 48 hours after a
financial institution takes a temporary freezing measure according to the
request of the People´s Bank of China, it shall immediately lift the temporary
freezing.
Article 24 When the
anti-money laundering staff of the People´s Bank of China and its branch
offices has one of following behaviors, administrative penalty shall be imposed
in accordance with relevant laws:
(1)
Having conducted
examination, investigation or take temporary freezing measure in violation of
regulations;
(2)
Having disclosed state
secret, business secret, or individual privacy that comes to his or her
knowledge in anti-money laundering work;
(3)
Having imposed
administrative penalty on a financial institution or staff in violation of
relevant regulations;
(4)
Other behaviors in the
fulfilling of responsibility not consistent with laws.
Article 25 When a financial institution
violates these Rules, the People´s Bank of China or its branch offices
above the district or municipal level shall impose punishments in line with
Article 31 and 32 of the Law of the People´s Republic of China on Anti-Money
Laundering; the China Banking Regulatory Commission, the China Securities
Regulatory Commission and the China Insurance Regulatory Commission are advised
to take the following measures based on the specific circumstances:
(1)
To order the financial
institution to suspend business and take remedial actions or revoke its business
license;
(2)
To disqualify
directors, senior executives and other employees held immediately accountable
for the misconduct from holding any positions and ban them from working in the
financial industry;
(3)
To order financial
institutions to issue a disciplinary warning to directors, senior executives
and other employees held immediately accountable for the misconduct.
When a branch office
at the county or city level of the People´s Bank of China detects any violation
of these Rules by a financial institution, it shall report to its
next-higher-level branch office, which shall impose punishment or give relevant
suggestions according to the afore-mentioned clause.
Article 26 When the People´s Bank of
China and any branch office above the district or municipal level impose administrative
penalty on financial institutions for violation of these Rules, it
should act according to provisions in the Rules of Administrative Penalty
Procedure of the People´s Bank of China.
Article 27 These Rules shall
enter into effect on January
1, 2007 and the Rules for
Anti-money Laundering by Financial Institutions promulgated by the People´s
Bank of China on January 3,
2003 are abolished at the
same time.
