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PBOC to Strengthen Management of Bank Settlement Operations

The People’s Bank of China (PBOC) has recently released a circular on issues related to the strengthening of management of payment and settlement operations for the prevention of new types of telecommunications network-based crimes (Yin Fa No. 261 [2016]).

According to the circular, financial institutions within the banking sector should pay attention to the following issues when opening bank settlement accounts for individuals: starting from 1 December 2016, a person may open only one Class I account with a bank. If the person has already opened a Class I account and wishes to open a new one with the same bank, he or she may only open a Class II or Class III account. Banks that charge cross-city handling fees for cash deposit, withdrawal and transfer between branches should cancel these fees within three months from the date of issuance of the circular.

The circular outlines seven major ways to strengthen the management of payment and settlement operations:

  1. Rigorously enforce the account holder real-name registration requirement;   
  2. Strengthen the management of funds transfer;
  3. Improve the administration of bank card business;
  4. Step up surveillance on suspicious transactions;
  5. Improve the mechanisms for emergency payment suspension and rapid freezing of funds;
  6. Severely crack down on unlicensed institutions;
  7. Introduce a responsibility tracking system.

All PBOC branches, banks and payment institutions are required to diligently perform their duties so that efforts to combat new types of telecom network-based crimes can achieve concrete results. Parties failing to do so shall be held accountable and subject to severe penalties. 

Should an alleged incident of new-type telecom network-based crime be identified, investigations would be initiated to examine whether the banks and payment institutions concerned have duly discharged their responsibilities. Financial institutions found to have violated relevant procedures and the provisions of the circular shall be sanctioned in accordance with applicable rules. In serious cases, the PBOC may impose penalties pursuant to the provisions of Article 46 of the Law of the People's Republic of China on the People's Bank of China, and suspend their account opening and payment handling business for one to six months through regulatory measures.

For the full text of the circular in Chinese, please see:

http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3154362/index.html

For more information about the circular in Chinese, please see:

http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3154338/index.html

Content provided by Picture: HKTDC Research
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