The international standards of customer due diligence and Chinese practice

Published date16 October 2009
Date16 October 2009
Pages406-416
DOIhttps://doi.org/10.1108/13685200910996083
AuthorTang Jun,Lishan Ai
Subject MatterAccounting & finance
The international standards
of customer due diligence
and Chinese practice
Tang Jun
School of Information, Zhongnan University of Economics and Law,
Wuhan, People’s Republic of China and
China Centre for Anti-Money Laundering Studies, Fudan University,
Shanghai, People’s Republic of China, and
Lishan Ai
Centre for Transnational Crime Prevention, Faculty of Law,
University of Wollongong, Wollongong, Australia
Abstract
Purpose – The purpose of this paper is to systematically introduce the latest documents of customer
due diligence (CDD) issued by international organizations and developed countries, and to examine
practice of CDD in China.
Design/methodology/approach – This paper reviews the latest regulations and guidelines of CDD
at international level, and critically examines the practice on CDD compliance in China.
Findings – Although China has developed series of provisions concerning CDD since 2007 to
response the international requirement set by Financial Action Task Force, the practical compliance
still has long way to improve.
Originality/value – This paper usefully highlights the difference between Chinese practice and
international standards, and proposes institutional reforms on CDD compliance in Chinese financial
sectors.
Keywords Customers, Due diligence, Money laundering,China
Paper type Research paper
1. Introduction
As key requirement of the measures to prevent money laundering in the 2003 Financial
Action Task Force (FATF) Forty Recommendations, customer due diligence (CDD) has
been highly emphasized by regulatory departments and financial institutions.
In response to international standard of anti-money laundering/combating of financing
of terrorists (AML/CFT), lots of countries (include China) choose to partly enforce these
provisions according to their own national conditions, especially some transition
countries. However, numerous commercial banks in China have gradually
implemented shareholding system transformation as well as internationalization
strategy. Consequently, being an official member of FATF, to fully implement relevant
international standards is a general trend of Chinese CDD-related practice.
Particularly, China has put in practice the administrative measures on customer
identification, which is formulated exactly in accordance with the international
standard in all financial institutions since August 2007. This paper systema tically
reviews the basic elements in the latest CDD documents issued by international
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
12,4
406
Journal of Money Laundering Control
Vol. 12 No. 4, 2009
pp. 406-416
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200910996083

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