Central Bank Of China Tightens Financial Regulations to Curb Money Laundering

The Central Bank of China is tightening financial regulation to put limits on transactions, aiming to curb money laundering activities.

The Central Bank of China stated on Wednesday that paper-based money deposits and withdrawals will not be affected, in response to the financial regulations that mandate customers to verify their identities when making a cash withdrawal or deposit on a single transaction of 50,000 yuan ($7,860) or more.

The key objective behind implementing the regulation is to overcome and eliminate financial crimes, specifically terrorist financing, and money laundering along with securing the customers’ money.

According to the laws, handling financial transactions either deposits or withdrawals of 50,000 yuan or more, or foreign currency equivalent up to $10,000, banks and other financial institutions need to identify the true identities of the customers, and the source of income, as well as purpose of the funds, shall be registered. However, as per the People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission joint decision, this order will take effect on March 1.

The new policy drew the attention of financial institutions as well as individuals. Many of them expresses their support and applauded the decision of making financial regulation more strict as it’s a necessary step to curb money laundering, terrorist financing, and other illicit activities 

In recent years, cybercriminal activities like illicit fundraising, cross-border gambling, telecommunication scams, money laundering, and terrorist financing have significantly increased, seriously endangering financial firms and individuals’ interests. According to media reports, in 2021 alone, the law enforcement authorities investigated more than 370,000 telecom crime cases.

In addition to this, tightening the financial regulations, particularly management of cash deposits and withdrawals is based on the obligation for financial firms to stay put with the anti-money laundering regulations, the central bank of china said. Moreover, to ensure AML obligations are practiced, the central bank will provide guidelines to financial institutions for formulating detailed implementation policies, including identifying and verifying customers only when they exceed the threshold amount.