Law on Anti-Money Laundering


    Law on Anti-Money Laundering

    The Law of the Peoples Republic of China on Anti-Money Laundering, promulgated on 31 October 2006 (the AML Law) establishes anti-money laundering (AML) obligations for financial institutions, as well as specific non-financial institutions involved in relevant practices. In particular, the AML Law stipulates requirements for prevention and supervision measures relating to, among other things, client identification processes, transactional records, and reporting to relevant authorities.  

    Last Updated: July 30, 2019

  • Requirements

    According to Article 17 of the AML Law, if a financial institution certifies the identity of its client through a third party, it shall be assured that the third party has adopted measures for clients’ identity clarification as prescribed by the AML Law. 

    These measures include that identity certification documents will be required from clients and any relevant agents or beneficiaries, and that such documents should be registered and verified, when: 

    • any financial institution establishes business relationship with a client or provides one-off financial services such as cash remittance, cash conversion and bill payment beyond the prescribed amount; 
    • a client entrusts an agent to deal with the transaction on its/their behalf; and 
    • a financial institution establishes a business relationship of personal insurance or trust with his client. (Article 16 of the AML Law)

    In addition, the AML Law provides that: 

    • financial institutions may not provide any service to or make any trade with any client who fails to clarify his identity or establish any anonymous or pseudonymous account; and 
    • if a financial institution has any doubt about the authenticity, effectiveness or integrity of a client’s identity material, it shall check the client’s identity again. 

    Article 21 of the AML Law stipulates that the specific measures for a financial institution to establish a clients’ identity clarification system and a preservation system for its clients’ identity materials and transactional records, shall be formulated by the competent department for anti-money laundering of the State Council in conjunction with the related financial supervision and administration institution under the State Council. 

    In case any third party fails to adopt the measures for the clients’ identity clarification as prescribed by the AML Law, the financial institution shall bear the liabilities for its failure to fulfil the obligation of clarifying the client’s identity (Article 17 of the AML Law). 

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