The National People's Congress (NPC) Standing Committee received China's draft Amended Anti-Money Laundering (AML) Law in September 2024. This is the legislation's inaugural major update since 2007. The new revisions, if approved, seek to update the nation's AML structure in order to handle changing national and international regulations.
One of the most significant modifications is the concept of money laundering, which has been broadened to include any conduct that hides the cash flow of any illicit activity. This expands the concept of money laundering beyond its previous concentration on particular crimes like monetary fraud and illicit drug trade. The modified law also imposes AML requirements on certain non-monetary organisations, including property builders, legal practices, and traders in valuable metals and gemstones, in addition to financial companies.
The suggested regulation has a strong focus on national security and mandates that AML initiatives serve both the public interest and national security. This modification extends the reach of financial legislation to protect the nation's monetary and economic credibility, reflecting China's expansive interpretation of national security.
The revised draft adds more stringent standards for customer due diligence and ongoing monitoring, as well as more severe punishments for AML infractions and much higher sanctions for infractions. In an effort to increase openness and reduce the danger of money laundering, financial companies are now required to perform due diligence on both the beneficial and legal proprietors of their customers. Additionally, the five-year time frame for client records has been increased to ten years.
International clauses in the legislation expand judicial authority over money laundering operations outside of China that pose a danger to the safety or monetary stability of the country. Transnational financial companies now face difficulties as a result of this shift, especially when it comes to data exchange and international inquiries, which now need Chinese regulators' advance permission. These organisations may face severe regulatory constraints as a result of the strict regulations on international information transmissions, particularly in light of China's more comprehensive Data Security Law and Personal Information Protection Law.
