Core Viewpoint - The People's Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission jointly released the "Management Measures for Customer Due Diligence and Customer Identity Information and Transaction Record Keeping" on November 28, which will take effect on January 1, 2026, emphasizing a risk-based approach to customer due diligence in financial institutions [2][4]. Group 1: Regulatory Changes - The requirement for individuals to register the source of funds for cash withdrawals exceeding 50,000 yuan has been removed, aligning with the previous draft [3]. - Financial institutions are now required to conduct customer due diligence based on the risk profile of the customer and the nature of the transactions, avoiding measures that do not match the level of money laundering risk [4][5]. Group 2: Risk-Based Approach - The new regulations advocate for a risk-based approach, allowing simplified measures for low-risk customers while enforcing stricter due diligence for high-risk situations [5][6]. - For example, pension withdrawals from social security accounts are considered low-risk, requiring only basic identity verification without additional documentation [6]. - Conversely, unusual transaction patterns, such as a sudden influx of large transfers into a student's account, will trigger enhanced scrutiny and investigation by the bank [7]. Group 3: Implementation and Impact - The management measures aim to balance the need for financial security with the convenience of financial services, promoting a more tailored approach to customer interactions [7].

Core Viewpoint - The People's Bank of China, along with the National Financial Regulatory Administration and the China Securities Regulatory Commission, has issued new regulations on customer due diligence and transaction record management, effective from January 1, 2026, emphasizing a risk-based approach to financial transactions [1][4]. Group 1: Regulatory Changes - The requirement for banks to register the source of funds for cash withdrawals exceeding 50,000 yuan has been removed, aligning with the previous draft [1][3]. - Financial institutions are mandated to maintain customer identity information and transaction records securely, ensuring they can reproduce each transaction for due diligence and suspicious activity investigations [4][7]. Group 2: Risk-Based Approach - The new regulations advocate for a risk-based approach, allowing banks to simplify procedures for low-risk transactions while intensifying scrutiny for high-risk situations [4][6]. - For example, pension withdrawals from clear sources are considered low risk, requiring only basic identity verification, while unusual transactions, such as sudden large transfers from a student, will trigger enhanced investigation protocols [5][6][7]. Group 3: Industry Perspectives - Industry insiders emphasize the need for a balance between "withdrawal freedom" and financial security, highlighting the challenges banks face in managing customer inquiries without overstepping [8][10]. - There is a call for clearer rules to navigate the tension between customer convenience and the necessity of regulatory compliance, ensuring that banks can fulfill their anti-money laundering obligations while providing efficient service [10][11][13].

Core Points - The People's Bank of China, along with the Financial Regulatory Administration and the China Securities Regulatory Commission, has officially announced the "Management Measures for Customer Due Diligence and Customer Identity Information and Transaction Record Preservation" which will take effect on January 1, 2026 [1] - The measures emphasize the principles of safety, accuracy, completeness, and confidentiality in preserving customer identity information and transaction records, ensuring that each transaction can be reproduced for due diligence, monitoring, and investigation of suspicious activities, including money laundering and terrorist financing [1][2] - The "risk-based" approach requires financial institutions to conduct customer due diligence based on customer characteristics and the nature of transaction activities, balancing money laundering risk prevention with the optimization of financial services [1][2] Risk-Based Due Diligence - Financial institutions are expected to implement simplified measures for customers with lower money laundering risks, while applying enhanced due diligence for higher-risk scenarios [1] - For example, pension accounts for elderly clients are considered low-risk due to their stable income sources and reasonable transaction amounts, leading to minimal additional verification requirements [1] - Conversely, if a typical university student suddenly receives large transfers inconsistent with their usual transaction patterns, banks must take extra precautions to investigate and verify the transaction background [2] - The core principle of "strict where necessary, lenient where possible" aims to promote a balanced approach in providing financial services while ensuring security [2]