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Banks in China will start checking the source and legitimacy of funds from March 1, 2022

From March 1, 2022, the "Administrative Measures for Due Diligence of Customers of Financial Institutions and Preservation of Customer Identity Information and Transaction Records" (hereinafter referred to as "Order No. 1") issued by the central bank and three other departments will be formally implemented.

These measures stipulate that commercial banks, rural cooperative banks, rural credit cooperatives, rural and settlement banks and other financial institutions must identify and verify the identity of customers, as well as the source of funds, when they make deposits and withdrawals of cash in the amount of 50,000 RMB or more, or in foreign currency equivalent to more than 10,000 US dollars for individual customers.

In this regard, the head of the relevant department of the People's Bank of China said that the implementation of the rules by financial institutions will not affect the normal activities of residents to deposit and withdraw cash, and the degree of business convenience will not be affected.

The above person in charge pointed out that the activities of depositing and withdrawing the legitimate income of residents have always been strictly protected by law in China. “Voluntary deposits” and “free withdrawals” are clearly defined in the Commercial Banking Law, which financial institutions must follow when dealing with deposits and cash withdrawals.

In recent years, in order to prevent telecommunications fraud, money laundering and other illegal and criminal activities, many financial institutions have made the necessary reminders of the source and use of funds when processing large amounts of cash and withdrawing money from the account. Therefore, when studying and developing Order No. 1 by the Financial Management Department, the relevant practices of financial organizations were generalized and unified, which also contributes to maintaining the consistency of business standards of various financial organizations.

Under normal circumstances, financial institutions do not require customers to complete information or provide supporting materials. Financial institutions can directly provide cash deposit and withdrawal services for customers and register relevant information after a simple request. Only in the event that a transaction is found to be clearly abnormal and there are reasonable grounds to suspect that illegal and criminal activities such as money laundering are taking place will additional information be requested from customers.

In the next phase, the People's Bank of China will guide financial institutions to develop detailed implementation rules. While fulfilling their anti-money laundering obligations in good faith, they must strictly adhere to the minimum and necessary principles for understanding registered customer information and not increase the burden on customers. Especially for the elderly and other groups who use cash more, financial institutions should take the lead in providing friendlier and more convenient services. At the same time, banks should pay attention to strengthening fraud prevention.

The above-mentioned responsible person indicated that the main purpose of implementing Order No. 1 is to prevent and suppress illegal and criminal activities such as money laundering, as well as to protect the security and interests of the public's funds.

In recent years, illegal and criminal activities such as telecommunications fraud, illegal fundraising, illegal pyramid schemes, cross-border gambling and underground banking have flourished, seriously threatening the interests of the people. In 2021 alone, public security authorities investigated more than 370,000 telecom fraud cases with victims across the country.
Among them, a characteristic feature is that criminals prefer to use cash for transactions, taking advantage of the anonymous and untraceable properties of cash. Financial institutions are properly strengthening the management of cash deposits and withdrawals in accordance with the law, which contributes to the prevention of illegal and criminal activities and the protection of the fundamental interests of the general public.

The aforementioned person in charge pointed out that "secrecy for depositors" is the main principle established in the Commercial Banking Law, and financial institutions must strictly maintain the personal information and confidentiality of customers obtained in the course of business processing. In addition to complying with the requirements of general laws such as the Civil Code and the Law on the Protection of Personal Information, financial institutions must also establish accurate and complete customer information in accordance with the requirements of the Commercial Banking Law, the Money Laundering Law. The disclosure of personal information and confidentiality of customers by the bank and its employees should be subject to legal and criminal liability in serious circumstances.

The above-mentioned responsible person pointed out that strengthening the management of cash deposits and withdrawals is a requirement for financial institutions to fulfill their anti-money laundering obligations, which is in line with international anti-money laundering standards.

The relevant provisions on deposits and withdrawals of cash by individuals in Order No. 1 comply with the requirements of current international standards on combating money laundering and are internationally recognized practices for preventing money laundering activities

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Создано: 10 февраля 2022

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