Sunday, April 18, 2021

China fines three financial institutions for lax anti-money laundering controls


China Minsheng Bank, China Everbright Bank and Huatai Securities have been fined a combined 52mn yuan for failures in customer identification, transaction reporting and record keeping.

The PBOC (People’s Bank of China) has fined China Minsheng Bank, China Everbright Bank and Huatai Securities for failing to adequately guard against money laundering.

The three financial institutions were penalised for failing to perform customer identification obligations, failing to submit large transaction reports and suspicious transaction reports, and for conducting transactions with customers with unknown identities.

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Minsheng and Everbright also failed to maintain customer identification and transaction records in accordance with regulations, the PBOC said in its notices.

China Minsheng Bank was fined CNY 23.6 million, while twelve of its officers were fined amounts between CNY 10,000 and 70,000.

China Everbright Bank was fined CNY 18.2 million, while eight of its officers were fined amounts between CNY 10,000 and 35,000.

Huatai Securities was fined CNY 10.1 million, while four of its officers were fined amounts between CNY 35,000 and 45,000.

According to Caixin, this is the first time the PBOC has published information on the people responsible for the violations, including their names, titles and why they were punished.

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This is also the first time banks have been fined more than CNY 10 million, after regulators signaled last year they would end the practice of fining financial institutions a few hundred thousand yuan for money laundering violations.

The higher penalties follow a FATF (Financial Action Task Force) mutual evaluation report, published last April, which said the annual CNY 41 million average the PBOC has imposed in recent years for AML violations was not “effective, dissuasive, nor proportionate”, given the size of the banks and other financial institutions.

Under Chinese law, AML violations at financial institutions carry a maximum one-off fine of CNY 5 million, but regulators can penalise them for multiple violations, each with its own fine.

Before now, the PBOC’s largest fine for AML violations was a CNY 4 million penalty against China Construction Bank’s Hangzhou branch last December.

In 2018, the PBOC issued nearly CNY 190 million in penalties for AML violations, up 41 percent from 2017, according to a report issued last November.

Earlier this year, the CBIRC (China Banking and Insurance Regulatory Commission) issued a circular to banks and insurers on improving the effectiveness of AML/CTF programmes.

The circular followed broader guidance for financial institutions issued in February 2019, covering improvements to internal controls at banks, improvements in the supervision mechanism, and clarifications on market access standards.

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