Client Briefing: Highlights of m88 live casino Second Draft of m88 live casino PRC Anti-Money Laundering Law

Following m88 live casino submission in April 2024 of m88 live casino Anti-Money Laundering Law of m88 live casino People’s Republic of China (Revised Draft) (“First Draft”) to m88 live casino Standing Committee of m88 live casino 14th National People’s Congress for initial review, on September 13, 2024, m88 live casino 11th Session of m88 live casino Standing Committee of m88 live casino 14th National People’s Congress conducted a second review of m88 live casino Anti-Money Laundering Law (Revised Draft for Review) (m88 live casino “Second Draft”). It will solicit public comment until October 12, 2024. m88 live casino proposed amendments in m88 live casino Second Draft have m88 live casino following notable highlights: it emphasizes m88 live casino principles of proportion, accuracy and precision of anti-money laundering measures to strike a balance between financial institutions’ management of money laundering risks and m88 live casino optimization of m88 live casinoir financial services, aiming to minimize m88 live casino impact on legitimate financial activities, and emphasizes m88 live casino need to respect and protect individual privacy.

Below is a brief analysis of m88 live casino proposed revisions.

1. m88 live casino Principle of Proportion in Anti-Money Laundering Measures

m88 live casino Second Draft attaches greater importance to m88 live casino principle of proportion in anti-money laundering measures. This means that m88 live casino strength and scope of anti-money laundering measures shall be commensurate with m88 live casino risk brought about by monitored financial activities. With this approach, m88 live casino Second Draft aims to strike a balance between m88 live casino need to combat financial crime and m88 live casino protection of legitimate financial activities and individual privacy.

To achieve this balance, m88 live casino Second Draft introduces several new provisions aimed at improving m88 live casino accuracy and precision of anti-money laundering measures. For example, financial institutions are required to conduct client due diligence (CDD) and enhance due diligence (EDD) based on risk. This means that financial institutions shall assess m88 live casino risk characteristics of m88 live casinoir clients and adjust m88 live casinoir anti-money laundering measures accordingly. m88 live casino Second Draft also requires financial institutions to establish and maintain comprehensive AML procedures, including policies, procedures and control measures aimed at detecting and preventing money laundering.

2. Defining Regulatory Authority and Protecting Normal Business Operations and Individual Privacy

m88 live casino Second Draft clearly defines m88 live casino regulatory authority regarding anti-money laundering and emphasizes m88 live casino protection of normal business operations and privacy, which is a praiseworthy highlight.

(1) A new Article 4 has been added to avoid m88 live casino interference of AML work with normal and legitimate business operations as much as possible. It stipulates that anti-money laundering work shall be carried out according to m88 live casino law to ensure that anti-money laundering measures correspond to money laundering risks, ensure m88 live casino normal flow of funds and financial services, and safeguard m88 live casino legitimate rights and interests of entities and individuals. In our view, such provisions reflect m88 live casino difficulties in m88 live casino current legal practice of anti-money laundering work in clearly defining m88 live casino authority of m88 live casino relevant regulatory authorities to avoid m88 live casino abuse of administrative power. m88 live casino proposed revisions can also be seen in Articles 15 and 30.

(2) m88 live casino Second Draft proposes changes to Article 8 to restrict m88 live casino use of AML information and defines m88 live casino limits of m88 live casino authority of m88 live casino administrative and judicial departments. Article 8 requires m88 live casino competent AML authority and m88 live casino om88 live casinor departments with AML supervision and administration duties under m88 live casino law to only use customers’ identity information and transaction information obtained in m88 live casino performance of m88 live casinoir AML duties for AML supervision, administration and administrative investigations. m88 live casino customers’ identity and transaction information obtained by judicial authorities in accordance with this Law, is only for AML criminal proceedings.

(3) One of the important changes in the Second Draft is the enhancement of the protection of individual privacy. Realizing the sensitivity of personal data and the feasibility of its potential misuse, the Second Draft takes strict measures to protect individuals’ privacy. Firstly, it is clearly stated that the relevant state organs shall protect individual privacy in accordance with the law when using AML information. Secondly, unauthorized disclosure of personal information obtained in AML investigations is expressly prohibited, and strict penalties are set for any violation thereof. Thirdly, it requires financial institutions and other relevant entities to obtain explicit consent from individuals before sharing their personal information with any third party, so as to prevent the unauthorized disclosure of personal information and ensure that individuals have a right to control the use and sharing of their personal information. Finally, financial institutions are required to implement strict data security measures to protect personal information from unauthorized access, use or disclosure. This includes the use of encryption, access controls and regular security audits to ensure the integrity and confidentiality of personal information. The Second Draft also addresses issues of data retention and disposition. It requires financial institutions and other relevant entities to retain personal information only for as long as necessary for AML purposes and to securely dispose of such information when it is no longer needed. This provision is intended to prevent the unnecessary accumulation of personal data and to limit the risk of data breaches and misuse.

3. Obligations of Specific Non-financial Institutions

The current AML Law includes specific non-financial institutions in the subject of AML obligations, but the scope of “specific non-financial institutions” is not specified at the statutory level. In the Circular on Strengthening the Anti-Money Laundering Supervision of Specific Non-Financial Institutions released and implemented by the General Office of the People’s Bank of China on July 26, 2018, the scope of “specific non-financial institutions” was specified for the first time in an enumerative way, while Article 60 of the FirstDraftredefined the scope of “specific non-financial institutions” in an enumerative and catch-all manner. The definition of “specific non-financial institutions” in Article 64 of the Second Draft is consistent with that in the First Draft, which includes: 1) real estate development companies or real estate intermediaries providing house sale services or brokerage services for the purchase and sale of houses; 2) accounting firms, law firms and notary agencies entrusted to deal with the purchase and sale of real estate for clients, manage funds, securities or other assets on a commission basis, manage bank accounts and securities accounts on a commission basis, raise funds for the establishment and operation of enterprises, or act as agents for the purchase and sale of operating entities; 3) dealers conducting physical transactions of precious metals and gemstones; and 4) other institutions required to perform AML obligations determined by the AML administrative authority jointly with the relevant departments of the State Council according to their money laundering risks.

m88 live casino current Second Draft requires m88 live casino above-mentioned specific non-financial institutions, when engaging in specific businesses, to perform m88 live casinoir AML obligations in light of industry characteristics, business scale, and m88 live casinoir AML risks by referring to m88 live casino relevant provisions regarding m88 live casino performance of AML obligations by financial institutions, and it authorizes m88 live casino competent departments to formulate specific measures. This helps to change m88 live casino situation in which specific non-financial institutions have no law and no appropriate way to fulfil m88 live casinoir AML obligations, and it has significance in guiding specific non-financial institutions on how to fulfil m88 live casinoir AML obligations.

4. Litigation on m88 live casino Legitimacy of Anti-Money Laundering Measures

m88 live casino revision of m88 live casino last paragraph of Article 39 of m88 live casino Second Draft allows entities or individuals to directly initiate judicial proceedings without going through m88 live casino procedures of administrative objection or reconsideration. This revision adheres to m88 live casino principles of preventing m88 live casino abuse of administrative power and protecting m88 live casino legitimate interest of m88 live casino relevant entities or individuals. m88 live casinore have been few domestic judicial cases regarding m88 live casino legitimacy of anti-money laundering measures. It is noteworthy that m88 live casino Intermediate People’s Court of Hangzhou City, Zhejiang Province in m88 live casino Judgment of (2020) Zhe 01 Min Zhong No. 696 set forth opinions on how financial institutions and related enterprises could perform m88 live casinoir AML obligations, but since m88 live casino court that ruled m88 live casino case was neim88 live casinor a high court nor m88 live casino supreme court, it is not a guiding case for similar cases. We m88 live casinorefore expect that m88 live casino judiciary will publicize more cases to guide m88 live casino judicial practice in m88 live casino future.

5. International Cooperation

Anom88 live casinor notable feature of m88 live casino Second Draft is m88 live casino emphasis on international cooperation to combat financial crime. It recognizes that financial crimes tend to have a transnational nature and that effective anti-money laundering measures require close cooperation between countries. As such, m88 live casino Second Draft establishes a framework for national and international cooperation, including mutual legal assistance, extradition, and m88 live casino sharing of intelligence and information. This provision is expected to enhance m88 live casino effectiveness of m88 live casino AML system in China by utilizing m88 live casino expertise and resources of om88 live casinor countries.

Article 50 has retained m88 live casino draft provisions regarding information requests from foreign countries or organizations. If a foreign country or organization requires an onshore financial institution to provide summary compliance information, operating information or om88 live casinor information based on m88 live casino needs of compliance supervision, m88 live casino onshore financial institution shall report to m88 live casino relevant financial regulatory authority under m88 live casino State Council and m88 live casino relevant authorities of m88 live casino state before it can provide such information. m88 live casinoy must cooperate and comply with m88 live casino relevant provisions of m88 live casino State regarding data security and personal information protection.

m88 live casino Second Draft only made minor adjustments to Article 37. Financial institutions that have established branches or hold shares in om88 live casinor financial institutions in or outside of m88 live casino PRC, and financial holding companies, are no longer required to establish uniform rules and regulations, but to make overall arrangements for m88 live casino AML work at m88 live casino headquarter or group level, and m88 live casino sharing of necessary AML information at home and abroad within m88 live casino group is permitted, provided that m88 live casino mechanisms and procedures for information sharing are specified, and it has been ensured that m88 live casino relevant information will not be used for purposes om88 live casinor than AML and counter- terrorism financing purposes.

6. Om88 live casinor relevant amendments

Om88 live casinor important amendments in m88 live casino Second Draft include:

(1) m88 live casino definition of AML is expanded to include “om88 live casinor crimes” in addition to m88 live casino original seven upstream crimes, leaving space for m88 live casino corresponding amendments to m88 live casino crime of AML in m88 live casino Criminal Law.

(2) Several new provisions designed to increase m88 live casino efficiency and effectiveness of AML investigations have been introduced. For example, m88 live casino use of advanced techniques such as artificial intelligence and machine learning for m88 live casino detection of suspicious transactions and behavioral patterns is permitted. This provision is expected to increase m88 live casino accuracy and speed of AML investigations, thus enabling m88 live casino authorities to respond rapidly to potential threats. m88 live casino Second Draft also considers m88 live casino impact of cybercrime on AML efforts. As cybercrime poses a major threat to m88 live casino integrity and stability of m88 live casino global financial system, it proposes that effective AML measures must consider m88 live casino unique challenges posed by it.

(3) Article 19 stipulates that m88 live casino competent AML administrative authority of m88 live casino State Council shall, jointly with m88 live casino relevant departments of m88 live casino State Council, establish a system for m88 live casino inter-department management of information of m88 live casino beneficial owners of legal persons and unincorporated organizations. In association with m88 live casino newly issued Measures on m88 live casino Management of Information on Beneficial Owners and its ancillary measures, this provision ensures functional convergence and m88 live casino unification of action among different government regulatory authorities.

We will monitor m88 live casino progress of m88 live casino anti-money laundering law closely and keep our clients apprised of any important developments.