Core Viewpoint - The People's Bank of China is drafting new regulations to enhance the identification and verification of beneficial owners by financial institutions, in line with the revised Anti-Money Laundering Law, aiming to improve the effectiveness of anti-money laundering efforts and comply with international assessments [1][4]. Summary by Relevant Sections Regulatory Framework - The new regulation, titled "Management Measures for the Identification of Beneficial Owners of Financial Institutions," is open for public consultation as of October 11 [1]. - The regulation aims to standardize the identification and verification processes for beneficial owners, addressing the shortcomings identified in current practices [4]. Risk-Based Approach - Financial institutions are required to adopt a risk-based approach in their customer due diligence, differentiating measures based on the risk profile of clients [4]. - The regulation specifies that beneficial owners are identified as individuals or entities holding more than 25% of shares, rights, or control over a company [4]. Differentiated Measures - The regulation introduces differentiated measures for low-risk and high-risk clients, moving away from a "one-size-fits-all" approach, which previously led to inefficiencies and resource wastage [5]. - For low-risk situations, simplified processes can be applied, while high-risk cases will receive more thorough scrutiny [5]. Feedback Mechanism - A differential feedback mechanism is established, requiring financial institutions to report discrepancies found during the verification of beneficial owner information [6]. - Institutions must communicate with clients to resolve any inconsistencies and correct any inaccuracies in their identification of beneficial owners [6]. Implementation and Training - Financial institutions are encouraged to enhance internal training to ensure staff understand and can effectively implement the new measures [6]. - Regulatory bodies are expected to strengthen oversight and international cooperation to combat cross-border money laundering [6].