How will the strengthened administration of account opening affect you?
作者:管理员    发布于:2017-07-28 15:04:10    文字:【】【】【

According to the Central Bank website on 25th May, the Central Bank recently issued the “Notice of the People’s Bank of China on Strengthening the Administration of Account Opening and the Follow-up Control Measures for Suspicious Transaction Reports” (hereinafter referred to as “Notice”) to strengthen the administration of account opening, and effectively preventing illegal account opening and trading of bank accounts and payment accounts, strengthen the follow-up control measures for suspicious transaction reports, and effectively improving the standards of risk prevention and control on money laundering. A Central Bank official said the measures do not have any impact on normal clients and their business.

 

The Central Bank said, the administration of account opening need to be strengthened to effectively prevent illegal account opening and trading of bank accounts and payment accounts, and effectively performing the obligation of client identification, and eradicating the opening of bank accounts in false or pseudonymous names.

 

The Central Bank suggested strictly examining abnormal account opening, and refusing account opening when necessary. When clients do not cooperate in client identification, organize to open accounts at the same time or in batches, offer an unreasonable reason for account opening, or client’s identity does not match the opening business, or there are obvious reasons to suspect that clients are engaged in card reselling or criminal activities, banking financial institutions and payment institutions have the right to refuse account opening.

 

For abnormal transactions identified through the transaction monitoring system, financial institutions and payment institutions shall focus on the value of client identity information and transaction records, which play an important role in customer due diligence to take effective measures and carry out artificial analysis and identification.

 

An official from People’s Bank of China said, the “Notice” has introduced two major changes in account opening management. First, according to the relevant notice of the Central Bank, banking institutions and payment institutions have “the right to refuse account opening” in three types of abnormal account opening situation. The “Notice” extends the applicable scope of “the right to refuse account opening”. Second, the “Notice” mentioned for the first time that under abnormal account opening, banking institutions and payment institutions shall review and judge the risk status of clients and their businesses, and decide whether to extend the account review period or strengthen customer due diligence efforts and other measures accordingly. For clients who are suspected to be engaged in criminal activities, banking institutions and payment institutions “shall refuse account opening”.

 

Given that the “Notice” put forward several client identification methods, so must banking institutions and payment institutions use these methods in account opening? The official responded that all banking institutions and payment institutions need to distinguish different degrees of client risks, and selectively adopting one or more appropriate identification methods to ensure that the strength of identification methods chosen are consistent with the degrees of client risks.

 

What is the main consideration of the “Notice” regarding the requirements for the follow-up control measures for suspicious transaction reports? The Central Bank said that the “Measures for the Administration of Financial Institutions' Reporting of High-Value Transactions and Suspicious Transactions” (Order No.3 [2016] of the People’s Bank of China) have provided comprehensive regulations on how the obligated institutions fulfil the obligated reporting, but they do not include whether and how to take appropriate internal control measures on the relevant suspicious clients and accounts after the suspicious transaction reports. In specific business practices, the obligated institution may continue to provide financial services for suspicious clients or accounts after submitting suspicious transaction reports, so the criminals can still use the relevant financial services. The “Notice” clearly points out that the obligated institutions need to focus on the management and control of the quality of suspicious transaction report, as well as continuously monitoring, managing and controlling the relevant risk after the report, and take timely and appropriate internal control measures to effectively prevent the institution from money laundering, terrorism financing and other criminal activities.   

 

Central Bank also said that according to the “Notice”, the follow-up control measures for suspicious transaction reports do not have any impact on normal clients and their business. Financial institutions and payment institutions shall adopt artificial analysis and identification to verify suspicious clients and their transactions, and take appropriate internal control measures after the approval of senior mangement. These measures are limited to suspicious clients and aim to restrict their means, scale and frequency of transactions, or if the risk is particularly high, stop providing financial services to the clients or terminate the business relationship with the clients. But they do not affect the clients’ ownership of legitimate funds in their accounts.

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