Looking back at the fines issued by banks in 2021, anti-money laundering has become the second largest reason for punishment, and recently some banks have been fined for violating anti-money laundering regulations.
According to the notice issued by the Anti-Money Laundering Bureau of Chinese Min Bank on the Issuance of the Guidelines for Self-Assessment of Money Laundering and Terrorist Financing Risks of Corporate Financial Institutions (hereinafter referred to as the "Guidelines"), legal person financial institutions should formulate or update their own money laundering and terrorist financing risk self-assessment system before December 31, 2021 to meet the overall requirements of the Guidelines, and complete the first self-assessment based on the new system by December 31, 2022.
The anti-money laundering action that seems to be far away from us is actually closely related to everyone, anti-money laundering work has become an important guarantee for maintaining national security and financial stability, and banks will increase their investment in anti-money laundering in the future.
Anti-money laundering is the main cause of fines
In recent years, anti-money laundering fines for banks have been repeated. Looking back at 2021, anti-money laundering and credit management are the hardest hit areas for banks to receive fines. For example, according to statistics, 6 of the Bank of China were punished by the People's Bank of China for violating the Anti-Money Laundering Law. According to the report released by Nancai Think Tank-21 Century Asset Management Research Institute and Geek Compliance, the number of fines issued in the field of anti-money laundering in 2021 reached 1460, accounting for 15.84%, a 50% increase over the previous year; the proportion also increased from 12% last year to 15.8%, becoming the second largest cause of fines for two consecutive years.
In November 2021, the People's Bank of China released the "2020 China Anti-Money Laundering Report" mentioned that in 2020, the mainland has achieved remarkable results in combating money laundering crimes, and the Anti-Money Laundering Monitoring and Analysis Center has received nearly 11.8 billion large transaction reports and 2.5867 million suspicious transaction reports submitted by 4319 reporting agencies, an increase of 6.5% and 57.96% respectively year-on-year.
Recently, the administrative penalty information published by the Urumqi Central Branch of Chinese Min Min Bank shows that Kunlun Bank Co., Ltd. (hereinafter referred to as "Kunlun Bank") was fined 2.69 million yuan for violating anti-money laundering regulations. At the same time, a number of senior executives of Kunlun Bank at the time were also punished.
Responsible for the violation of anti-money laundering regulations, the Urumqi Central Branch of the People's Bank of China imposed a fine of 10,000 yuan on Zuo Wei, then president of Kunlun Bank; 45,000 yuan on He Fang, then vice president and president of Kunlun Bank; 60,000 yuan on Wang Mingdong, then assistant president of Kunlun Bank; and 10,000 yuan on Yan Jiu, then vice president of Kunlun Bank.
On January 7, the Fuzhou Central Branch of Chinese Minmin Bank published a batch of administrative penalty information on its official website, and the Fuzhou Branch of Shanghai Pudong Development Bank Co., Ltd. was fined 1.65 million yuan for failing to perform customer identification obligations in accordance with regulations and trading with unidentified customers; the Fujian Branch of Postal Savings Bank of China Co., Ltd. was fined 1.65 million yuan for failing to monitor bank settlement account transactions, failing to file or overdue filing for opening personal bank settlement accounts, The Fujian Branch of Bank of China Co., Ltd. was fined 1.65 million yuan for violations of laws and regulations such as opening virtual account books with external receipt and payment functions, and the Fujian Branch of Bank of China Co., Ltd. was fined 1.65 million yuan for failing to perform customer identification obligations in accordance with regulations and conducting transactions with unidentified customers.
According to the "China Anti-Money Laundering Report 2020" released by the central bank, the People's Bank of China carried out anti-money laundering law enforcement inspections on 614 obligated institutions throughout the year, of which 87% were legal entities, punishing 537 anti-money laundering violation institutions according to law, with a fine amount of 526 million yuan, punishing 1,000 individuals who violated the rules, and fining 24.68 million yuan.
"Since the banking and insurance regulatory commission issued the first anti-money laundering fine in the third quarter of 2021, the anti-money laundering of financial institutions has entered the era of substantive multi-head supervision. The 2021 Draft Amendment to the Anti-Money Laundering Law also constructs a multi-ministerial regulatory responsibility framework. In the future, bullish supervision will become the norm, and anti-money laundering obligatory institutions will also face further compliance pressure. Ni Jianming, who was the director of the analysis department of the Anti-Money Laundering Monitoring and Analysis Center of the People's Bank of China, said.
Banks need to increase anti-money laundering investment
From 2004, the People's Bank of China led the establishment of an inter-ministerial joint conference mechanism on anti-money laundering to coordinate 23 judicial, law enforcement and administrative departments related to anti-money laundering; by 2018, the People's Bank of China's Bank of China issued Circular No. 120, which has required specific non-financial institutions to undertake anti-money laundering obligations and accept regulatory inspections and administrative penalties for violations of laws and regulations by the People's Bank of China or industry authorities; and then to last year's draft revision of the Anti-Money Laundering Law, the mainland's supervision of anti-money laundering has gradually improved and become stricter.
"The most direct and fundamental change in the revision of the Anti-Money Laundering Law is the adjustment of the general direction of the anti-money laundering work of financial institutions, highlighting the change from compliance to effectiveness." Chen Zhiping, regional director of risk information China and a member of the Association of Recognized Anti-Money Launderers, told the International Finance News.
"Since the promulgation of the Anti-Money Laundering Law, the mainland's anti-money laundering work system has become increasingly perfect, the effectiveness of anti-money laundering supervision has been significantly enhanced, the anti-money laundering and upstream crimes have achieved results, and participation in international anti-money laundering governance and cooperation has been deepening." Chao Kejian, director of the Anti-Money Laundering Bureau of the Chinese Min min bank, believes that the current revision of the law has its necessity, "At present, the situation of anti-money laundering work in the mainland has undergone profound changes, and the current law can no longer fully meet the requirements of the new situation in terms of anti-money laundering goals, tasks, concepts, scope of obligations, investigations, and penalties. In order to make the anti-money laundering work better serve the modernization of national governance capabilities, serve the requirements of preventing and resolving financial risks, and serve the work of safeguarding national security and financial security, it is urgent to make amendments. ”
Chen Zhiping pointed out that what needs to be seen is that with the advancement of China's anti-money laundering rectification, some of them have achieved results. For example, in the past, the anti-money laundering law was like a car buyer only car about whether the hardware in the car is complete, but now it is more concerned about the details of driving, whether to fasten seat belts, and whether to comply with traffic laws. "Returning to the financial industry, I not only want to know whether financial institutions have anti-money laundering staffing and system process mechanisms, but also whether you have effectively responded to corporate risks, and whether the invested personnel and systems have effectively ensured the management level of anti-money laundering."
He believes that There is still more way for Chinese banks to go in the future. The first is a level of cognition of the risk, different financial institutions face different money laundering risks, according to the business details of each bank, the size of the institution, the distribution of customer groups to judge; the second is to do a good job of customer due diligence, customer identification, the customer's intention behind the financial services should also be understood; the third is a penetration of ownership, identify who the ultimate beneficiary of the funds is, so as to better identify the relevant customers or business money laundering risks, It is also the place where regulators and international anti-money laundering organizations expect the future of mainland financial institutions.
According to the "Enhanced Follow-up Report" of the international anti-money laundering official organization FATF (Financial Action Task Force) on China's anti-money laundering work in 2021, there are two deficiencies in the mainland's anti-money laundering work: first, banks and other financial institutions do not identify customers, sanctions and ultimate beneficiaries in due diligence (involving 3 contents); second, for specific non-financial institutions such as payment, the requirements for due diligence, risk assessment, and regulatory measures are not clear.
From the perspective of the identification of customers by banks, it still needs to be improved. For example, there is a money laundering method called running points, but in fact, participants use their own bank cards, public bank accounts, third-party collection codes and other payment tools to allow criminals to use these accounts to transfer illegal funds and assist criminals in money laundering. Criminals will use the pattern of disguise and cash rewards to induce the runners to assist in money laundering. The Public Security Bureau of Benxi City, Liaoning Province, recently detected a case of a very large network "running sub-platform", involving an amount of up to 50 billion yuan, and banks must strengthen the identification of money laundering in the "running points" model to further reduce potential financial risks.
The Bank Risk and Compliance Department of Shanghai Fulakai Law Firm believes that from the perspective of banks preventing customers from using running points to launder money, it is precisely because the essence of running points is to rent bank cards, public bank accounts, collection codes, etc. for use by criminals, so how to identify these problematic bank cards or accounts has become the key.
As for the most common public accounts that participate in running points, most of them are "shell companies" without actual business addresses, no real operations or no personnel, and the main characteristics of customers are similar to the main body of leasing and reselling bank accounts, as long as banks strengthen the due diligence of customer account opening links, according to the "Guiding Opinions of Chinese Bank on Doing a Good Job in Personal Bank Account Service Work such as Mobile Employment Groups", a large part of the money laundering risk of using bank cards to run points can be eliminated.
In addition, Chen Zhiping also pointed out: "In the control of anti-money laundering, the leaders of financial institutions should pay enough attention to the anti-money laundering work, anti-money laundering work does not stop at the business department, but from the directors and supervisors to establish the awareness of the importance of anti-money laundering, from top to bottom to establish such an anti-money laundering compliance culture, and to ensure that our financial institutions have enough investment in anti-money laundering resources." ”
Judging from the fines issued, it has become the norm to punish institutions and high-ranking officials. In the People's Bank of China's "2019 China Anti-Money Laundering Report", it highlighted the effectiveness of "double penalties". In 2019, the People's Bank of China carried out anti-money laundering law enforcement inspections on 1744 obligated institutions throughout the system, and punished violations of anti-money laundering regulations according to law, with a total fine amount of 215 million yuan, an increase of 13.7% year-on-year, basically achieving "double penalties". Among them, 525 violating institutions were punished according to law and fined 202 million yuan; 838 individuals were punished, and 13.41 million yuan was fined.
"Observing the industry trend, we can see that the investment of banks in anti-money laundering teams and technologies will be increasing, and banks with more mature follow-up control measures will be able to further expand their business, while banks that cannot fully prevent money laundering risks will shrink their businesses and avoid contact with businesses with higher risks and beyond the field of prevention." Chen Zhiping said.
This article originated from the International Finance News
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