Last Updated: 20/10/2009
CENTRAL AUTHORITY FOR REPORTING.
- China Anti-Money Laundering Monitoring & Analysis Centre (the “China AML MAC”);
- Anti-Money Laundering Bureau;
Both authorities are located within the People’s Bank of China (the “PBC”).
OTHER ANTI-MONEY LAUNDERING REGULATOR(S).
ARE LAWYERS COVERED BY MONEY LAUNDERING LEGISLATION?
According to a Financial Action Task Force Report released in 2007 (“FATF Report 2007”), China has not applied specific anti-money laundering (“AML”) measures to lawyers.
However, lawyers may be covered by the AML provisions in the Criminal Law, 2009, which applies to the following:
All persons who commit crimes within the territory of the PRC;
All PRC citizens who commit crimes outside the territory of the PRC which have a minimum sentence of three or more years of fixed term imprisonment; and
Foreigners, who outside the PRC territory, commit crimes against the PRC state or PRC citizens, which are also punishable according to the law of the place where it was committed, and which have a minimum sentence of three or more years of fixed term imprisonment.
It should also be noted that Article 49 of the PRC Law on Lawyers allows the State Department to revoke a lawyer’s practising certificate if a criminal penalty is imposed on the lawyer for an intentional crime.
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
Administrative Measures for Identifying the Financial Institutions' Clients and Preserving Their Identity Information and Transaction Records 2007 (Joint Order of PBC, CBRC, CSRC, CIRC  No.2, issued on 2007.6.21 and effective on 2007.8.1) (“Regulations on Customer Identification”);
Administrative Measures for the on-site of Anti-money Laundering Inspections (for Trial Implementation), 2007;
Administrative Rules for the Reporting by Financial Institutions of Large-value and Suspicious Transactions, 2006;
Anti-money Laundering Work Guideline for Members of the China Futures Association (issued and effective on 2008.5.19;
Anti-money Laundering Work Guideline for Members of the Securities Association of China (issued and effective on 2008.4.21);
Detailed Rules for Anti-money Laundering Investigations (Trial Implementation);
Insurance Law of the People’s Republic of China, 2009;
Measures for the Administration of Financial Institutions’ Reports on Suspicious Financing Transactions for Terrorist-related Activities, 2007;
Off-site Anti-money Laundering Supervision Measures (Trial Implementation), 2007;
PBC Notice on Strengthening the Anti-money Laundering Work in the International Remittance Agency Business, 2008;
Provisions on Anti-Money Laundering Through Financial Institutions 2006;
Standard Guidance for Classification of Client Risk Level in Anti-money Laundering for Securities Companies, 2009 (China Banking Association, Zhong Zheng Xie Fa  No. 110, issued and effective 2009.08.18);
Tentative Guidance on Risk Rank Classification of Clients of Fund Management Companies for Anti-money Laundering Purposes, 2009;
The Rules on Legal Counsel for Lawyers, issued by the All China Lawyer Association (the ACLA) on 26 Mar 2003, effective on the same date.
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
Visiting lawyers are also subject to the AML provisions in the Criminal Law.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
There is currently no money laundering guidance for lawyers.
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
The State Judicial department is responsible for supervising lawyers and lawyers in general must respect the Code of Ethics issued by the All China Lawyer Association (the “ACLA”). However, the State Judicial department and the ACLA are not specifically required by the PRC Law on Lawyers or the Code of Ethics to supervise lawyers in regards to AML obligations.
Article 49 of the PRC Law on Lawyers allows the State Department to revoke a lawyer’s practising certificate if he or she has taken part in criminal activity.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
There are currently no AML client due diligence requirements that must be specifically undertaken by lawyers.
However, according to Article 11 Rules on Legal Counsel for Lawyers issued by the All China Lawyer Association (the “ACLA”), “For clients who are legal persons, lawyers are required to determine whether the legal person is a “legal establishment or legal existence”, its current conditions, the scope of its business as confirmed in its business license and its actual major business scope.
For customers who are natural persons, lawyers are required to determine their nationality, residence, vocation and “other natural conditions”. Lawyers are required to keep a working diary of legal services provided.
Lawyers engaging in securities work are required to keep their working papers for 10 years. (See para 537 & 538 of FATF Report 2007).
Additionally, lawyers who work for financial institutions may also be required to undertake for those institutions the customer due diligence requirements that they are obliged to undertake. These include:
- Establishing internal AML control system;
- Establishing customer identification system;
- Establishing the system to maintain customer identity data and transaction records;
- Establishing the system of reporting large or suspicious transactions;
- Internal AML control system.
This includes the establishment of a designated internal department and assigning a person in charge to be responsible for the implementation of internal AML control. This system will frame internal operation regulations, monitoring measures and conduct staff training.
- Customer identification system.
Obligated institutions must:
- Identify and verify their customers, including any beneficial owners, with whom they established a business relationship with or to whom they provide a one-time financial service exceeding certain amounts.
For example, verification is required when carrying out occasional transactions over RMB 10,000 or when providing cash deposit or withdrawal over RMB 50,000; when providing safe deposit box services, remittance services, non-over-the-counter services such as via telephone, internet or ATM.
- Understand the purpose and nature of the customer’s transaction.
- Maintenance of customer identity data and transaction records.
The records should be updated in a timely way. The information shall be kept for no less than 5 years since the termination of business relationship with the customer or since the account was booked.
- System of reporting large and suspicious transaction.
An obligated institution must report to the China AML MAC large and/or suspicious transactions. For instance, any cash deposit or withdrawal of over RMB 200,000 or US$10,000 in one business day.
Administrative Rules for the Reporting by Financial Institutions of Large-value and Suspicious Transactions further sets out the scenarios to be reported to the AML MAC as suspicious transactions by the banking industry, securities industry and insurance industry respectively.
Measures for the Administration of Financial Institutions’ Reports on Suspicious Financing Transactions for Terrorist-related Activities, 2007 provides a non-exhaustive list of the scenarios, regardless of the value of the involved fund or asset, that shall be reported as terrorist financing suspicious transactions.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
There are currently no AML client due diligence requirements that must be undertaken by lawyers, on a risk-based basis or otherwise.
However, the customer due diligence requirements for financial institutions which lawyers who work for those institutions may be required to undertake for those institutions, have a risk based approach.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Please refer to the boxes above.
It should also be noted that Article 19 of the Regulations on Customer Identification states that “where any of [the] clients [of the financial institution] is an important political figure of a foreign country, the financial institution shall take reasonable measures to get to know the source and use of his funds”.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
Please refer to the box above.
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
There is currently no law permitting lawyers to rely on third party due diligence.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
There is currently no law specifically obliging a lawyer to report a money laundering offence.
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
Please refer to the box above. There is currently no law which provides specifically that attorney/client privilege and/or duties of confidentiality provide a defence or partial/total exception to reporting suspicious transactions.
In general, lawyers are not allowed to divulge a client’s personal information and situation. However, the PRC Law of Lawyers provides a defence for a lawyer who breaches the duty of confidentiality in circumstances where the information disclosed relates to a crime:
Which compromises national security or public security; or
Seriously endangers the safety of the body or property of a person, which a client or other person is preparing to commit or is committing.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
Please refer to the box above. There is currently no local law which specifically provides any criminal and/or civil indemnity to a lawyer who has reported a suspicious transaction.
A PRC lawyer has no specific duty to report suspicious transactions. But if he does so in breach of the duty of confidentiality, he will have a defence for breaching that duty if the information disclosed relates to a crime compromising national security or public security or seriously endangering the safety of the body or property of a person, which a client or other person is preparing to commit or is committing.
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
There is currently no law which allows a lawyer to proceed with legal advice/transaction once a suspicious transaction report has been filed.
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
There is currently no tipping off prohibition provisions applicable to lawyers.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.
There are currently no restrictions on accepting a new client.
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
Under Article 9(3) Decree No.1, Financial institutions are required to re-identify a customer’s identity when detecting any abnormal phenomenon or questioning the authenticity of any identity documents previously obtained.
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
Lawyers are affected through the Criminal Law that criminalises money laundering acts within the PRC territory and money laundering acts outside the PRC territory by PRC citizens.
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
There are not cases known in the PRC territory of lawyers being implicated in money laundering.
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
Although the Financial Action Task Force was generally satisfied with the 40+ 9 Recommendations in relation to financial institutions, they recommended in their report, released in 2007, that the AML obligations (including specific customer identification and record keeping requirements) be extended to Designated Non-Financial Businesses and Professions (which include lawyers).
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