china-kyc-rules
Purpose
Define China KYC and Anti-Money Laundering Rules — comprehensive KYC/AML requirements for Chinese financial services.
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Regulatory Framework
Primary Regulations
| Regulation |
Authority |
Key Requirement |
| Anti-Money Laundering Law |
Standing Committee of the National People's Congress |
AML framework law |
| Administrative Measures for Financial Institutions' Customer Due Diligence and the Preservation of Customer Identity Information and Transaction Records |
People's Bank of China |
CDD/KYC requirements |
| Administrative Measures for Financial Institutions' Reporting of Large-Value Transactions and Suspicious Transactions |
People's Bank of China |
STR reporting |
| Guidelines for Self-Assessment of Money Laundering and Terrorist Financing Risks by Legal Person Financial Institutions |
People's Bank of China |
Risk assessment |
| Measures for the Identification of Beneficial Owner Identity |
People's Bank of China |
UBO identification |
| Anti-Money Laundering Work Procedures for the Securities and Futures Industry |
CSRC |
Securities-specific AML |
Customer Identification
1. Customer Identification
Minimum identification requirements:
| Customer Type |
Required ID |
Additional |
| Chinese natural person |
ID card (verified) |
|
| Foreign natural person |
Passport + residence permit |
|
| Chinese legal person |
Business license + legal representative's ID card |
|
| Foreign legal person |
Certificate of registration + authorized representative |
|
| Partnership enterprise |
Business license + partnership agreement |
|
| Sole proprietorship |
Business license + operator's ID card |
|
2. UBO Identification
UBO identification rules:
| Ownership % |
UBO Identification |
| ≥25% direct |
Direct owner |
| ≥25% indirect |
Chain through entities |
| No 25% owner |
Controlling person |
| Government |
N/A (state entity) |
UBO information to collect:
| Field |
Content |
| Name/designation |
Name |
| Identity document |
ID type and number |
| Address |
Address |
| Shareholding percentage |
Ownership % |
| Control method |
Control mechanism |
3. Customer Risk Classification
Risk categories:
| Category |
Criteria |
Due Diligence |
| Low risk |
Listed companies, government entities |
Simplified CDD |
| Medium risk |
Private companies, HNW individuals |
Standard CDD |
| High risk |
PEPs, high-risk jurisdictions |
Enhanced CDD |
Risk factors:
| Factor |
Low |
Medium |
High |
| Customer type |
Listed, gov |
Private corp |
Shell company |
| Industry |
Low risk |
Medium |
Gambling, MSB |
| Geographic location |
Onshore |
Main cities |
Offshore, high-risk |
| Transaction pattern |
Simple, regular |
Moderate |
Complex, unusual |
| PEP |
No |
No |
Yes |
4. Due Diligence Procedures
Simplified CDD (low risk):
| Step |
Action |
| 1 |
Identify customer |
| 2 |
Verify identity |
| 3 |
Record information |
Standard CDD (medium risk):
| Step |
Action |
| 1 |
Identify customer |
| 2 |
Verify identity |
| 3 |
Identify UBO |
| 4 |
Understand nature of business |
| 5 |
Verify source of funds |
| 6 |
Ongoing monitoring |
Enhanced CDD (high risk):
| Step |
Action |
| 1-6 |
Standard CDD |
| 7 |
Senior management approval |
| 8 |
Enhanced source of wealth |
| 9 |
Enhanced ongoing monitoring |
| 10 |
PEP approval (if applicable) |
5. Ongoing Monitoring
Ongoing CDD requirements:
| Activity |
Frequency |
| Customer information updates |
Every 3-5 years or upon change |
| Transaction monitoring |
Real-time / Daily |
| Risk level reassessment |
Every 1-3 years |
| Beneficial owner updates |
Upon change |
Transaction Monitoring
Large Transactions
Reporting thresholds:
| Type |
Threshold |
Action |
| Cash |
RMB 50,000+ |
Report |
| Transfer |
RMB 200,000+ (individual) |
Report |
| Transfer |
RMB 500,000+ (entity) |
Report |
| Cross-border |
RMB 20,000+ |
Report |
Suspicious Transactions
Suspicious transaction indicators:
| Pattern |
Concern |
| Rapid in-and-out |
Rapid in-out (layering) |
| Scattered inflows and concentrated outflows |
Multiple in, one out (structuring) |
| Concentrated inflows and scattered outflows |
One in, multiple out |
| Long-dormant account suddenly activated |
Dormant account activation |
| Counterparty in a high-risk region |
High-risk jurisdiction |
| Transactions inconsistent with customer background |
Mismatch with profile |
| Large cash transactions |
Large cash transactions |
| Frequent cross-border transactions |
Frequent cross-border |
Record Keeping
| Record |
Retention Period |
| Customer Identity Information |
Business relationship + 5 years |
| Transaction Records |
5 years from transaction |
| Large-Value Transaction Report |
5 years |
| Suspicious Transaction Report |
20 years |
A-share Specific Requirements
Securities Account KYC
| Requirement |
Detail |
| Third-Party Depository |
Third-party custody |
| Identity Verification |
Real-name registration |
| Risk Assessment |
Risk assessment questionnaire |
| Suitability Matching |
Suitability matching |
| Follow-Up Visit |
Follow-up calls |
Account Opening Process
| Step |
Action |
Document |
| 1 |
Identity Verification |
ID card verification |
| 2 |
Risk Assessment |
Risk questionnaire |
| 3 |
Suitability Assessment |
Suitability assessment |
| 4 |
Sign Agreement |
Account agreement |
| 5 |
Third-Party Depository |
Bank linkage |
| 6 |
Follow-Up Visit |
Telephone confirmation |
Sanctions & Restrictions
Restricted List
| Category |
Examples |
| Dishonest Judgment Debtor |
Debtors in default |
| Capital Market Dishonesty |
Market ban list |
| Private Fund Prohibition |
Private fund bans |
| Securities Association of China |
Industry bans |
High-Risk Jurisdictions
| Region |
Risk Level |
| FATF Grey List |
Enhanced CDD |
| FATF Black List |
Prohibited |
| OFAC Sanctions List |
Prohibited |
| United Nations Sanctions List |
Prohibited |
Quality Checks
Before completing:
- Customer identified and verified
- UBO identified
- Risk classification assigned
- CDD procedures followed
- Source of funds verified
- Transaction monitoring in place
- Records maintained
- Reports filed as required
