China’s AML Law Revision

Regulation Name: China’s AML Law Revision
Publishing Date: 1 January 2025
Region: China
Agency: National People’s Congress

Revised Anti-Money Laundering Law in China: Expanded Scope and Strengthened Protections

On January 1, 2025, the revised Anti-Money Laundering (AML) Law of the People’s Republic of China officially came into effect. This updated legislation marks a comprehensive overhaul of the country’s existing anti-money laundering framework, reflecting China’s commitment to strengthening financial security, enhancing regulatory enforcement, and safeguarding the rights of individuals and institutions.

Key Updates in the Revised AML Law

1. Expanded Scope of Money Laundering Crimes

The revised law broadens the scope of money laundering activities to include the concealment or hiding of proceeds derived from “other crimes” beyond the seven primary upstream crimes already covered. By targeting additional criminal proceeds, the legislation aims to reveal the multifaceted nature and significant harm caused by money laundering.

2. Balancing Compliance with Financial Rights

A key aspect of the revision is balancing anti-money laundering efforts with the protection of legitimate financial activities. To achieve this, the law introduces new provisions for financial institutions, including:

• Risk-Based Customer Due Diligence: Financial institutions are now required to tailor customer due diligence procedures based on the risk level of transactions and the characteristics of customers. Low-risk cases will benefit from simplified processes, ensuring smoother operations for businesses and individuals.

• Simplified Relief Procedures: In cases where individuals or entities object to anti-money laundering risk management measures, the law allows them to directly file lawsuits with the people’s court. Additionally, financial institutions are obligated to handle basic financial services promptly, even during ongoing investigations.

Strengthened Data Security and Privacy Protections

The revised AML law places a significant emphasis on personal data security and privacy, reflecting growing concerns over information misuse in the digital age. Key measures include:

• Strict Handling of Sensitive Data: Financial institutions and their staff are required to securely manage any data obtained during anti-money laundering operations in accordance with relevant privacy laws.

• Information Sharing Restrictions: The law introduces regulations for sharing anti-money laundering information within institutions and among group members, ensuring compliance with information protection legislation.

• Accountability for Leaks: Government staff and financial institution employees who leak sensitive anti-money laundering information will face increased legal consequences.

Improved Supervision and Dispute Resolution

The revision also focuses on enhancing supervision mechanisms and providing individuals and institutions with clearer pathways for resolving disputes. These measures include:

• Direct Legal Remedies: Units and individuals who disagree with risk management measures can now seek immediate legal recourse, improving transparency and accountability in the system.

• Heightened Oversight: Institutions tasked with anti-money laundering duties face higher standards of compliance and accountability, fostering more effective enforcement and supervision.

Balancing Enforcement and Rights

According to officials from the Legislative Affairs Commission of the Standing Committee of the National People’s Congress, the revisions aim to strike a balance between effective anti-money laundering efforts and protecting the legitimate rights of individuals and organizations. By simplifying procedures for low-risk cases, improving access to financial services, and strengthening data protection, the law ensures a more equitable regulatory framework.

Implications for Businesses and Individuals

For businesses, particularly those in financial services, e-commerce, and other high-risk sectors, the revised law underscores the importance of implementing robust compliance programs. Tailored customer due diligence procedures, secure data handling, and adherence to privacy laws will be critical to meeting these new regulatory requirements.

Individuals, meanwhile, stand to benefit from the law’s enhanced safeguards against data misuse and its simplified mechanisms for challenging risk management measures.

Conclusion

The revised Anti-Money Laundering Law of the People’s Republic of China represents a significant step forward in the country’s fight against financial crime. By expanding the scope of money laundering crimes, improving data security measures, and simplifying compliance processes, the law ensures a more comprehensive and balanced framework.

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