Core Viewpoint - The article discusses the new regulatory framework issued by the People's Bank of China, emphasizing a risk-based approach to customer due diligence in financial institutions, balancing anti-money laundering measures with the need for efficient financial services [1][3]. Group 1: Regulatory Changes - The new regulation cancels the previous requirement for customers to register the source of funds for cash withdrawals exceeding 50,000 yuan, maintaining consistency with the earlier draft [1]. - Financial institutions are now required to conduct customer due diligence based on the risk profile of clients and the nature of transactions, avoiding mismatched measures against money laundering risks [3][5]. Group 2: Balancing Security and Convenience - The regulation aims to address the tension between the public's desire for convenient financial services and the necessity for security against financial crimes such as telecom fraud and online gambling [3][5]. - There is a recognition of the complaints from customers regarding excessive inquiries during banking processes, while also acknowledging the need for thorough due diligence to prevent financial losses [5]. Group 3: Risk-Based Approach - Financial institutions must implement simplified measures for low money laundering risk scenarios while enhancing due diligence for high-risk situations [7][8]. - Examples illustrate that if a customer's transaction history is consistent and within reasonable limits, minimal additional verification is required. Conversely, unusual transaction patterns necessitate further investigation [8]. Group 4: Privacy and Compliance - The article clarifies that conducting customer due diligence does not conflict with personal privacy rights, as it is a standard practice in anti-money laundering efforts globally [10][11]. - Financial institutions are legally obligated to maintain confidentiality regarding customer information obtained during due diligence processes, with strict penalties for violations [11].

Core Viewpoint - The People's Bank of China, along with the National Financial Regulatory Administration and the China Securities Regulatory Commission, has drafted a "Customer Due Diligence and Customer Identity Information and Transaction Record Management Measures (Draft for Comments)" to enhance anti-money laundering (AML) practices in financial institutions, addressing gaps in risk-based customer due diligence measures [1][2]. Group 1: Background and Rationale - The new AML law, effective from January 1, 2025, necessitates further refinement of supporting measures [1]. - Regulatory findings indicate that financial institutions have been inadequate in implementing risk-appropriate customer due diligence measures [1][2]. - The draft management measures aim to align China's regulations with international standards set by the Financial Action Task Force (FATF) regarding simplified due diligence and beneficial ownership [1]. Group 2: Key Provisions of the Draft Management Measures - The management measures emphasize a risk-based approach, allowing for simplified due diligence in low-risk scenarios, and only requiring enhanced due diligence in high-risk situations related to money laundering or terrorist financing [2]. - The measures do not mandate verification of the source and purpose of cash transactions over 50,000 yuan unless there is a high risk of money laundering, thus reducing unnecessary interference in the daily financial activities of the public [2]. - Legal experts have noted that the emphasis on a risk-based principle aims to help financial institutions avoid a "mechanical" approach to customer due diligence, fostering a dynamic and precise AML risk prevention mechanism [2]. Group 3: Data and Recommendations - In 2024, the People's Bank of China received over 11,000 key suspicious transaction reports, leading to more than 2,900 AML investigations and the transfer of over 6,300 leads to law enforcement [3]. - The draft management measures suggest further clarification of financial institutions' discretionary powers to prevent excessive escalation of due diligence requirements based on vague suspicions [3]. - It is crucial to balance the prevention of money laundering with minimizing the impact on the general public, aiming for a principle of convenience without disturbance in the final implementation of the management measures [3].