Shanghai / Reuters
China’s banking regulator said on
Tuesday that lenders should tighten risk controls in their overseas branches, after some of the country’s top banks have come under foreign scrutiny for alleged compliance failings.
Banks should clarify the responsibilities of staff in overseas branches, strengthen judgment of risk and make sure adequate checks are made on clients, the China Banking Regulatory Commission (CBRC) said in a statement on its official website.
“Banking institutions should strictly follow ‘know your customer’ requirements,” said the CBRC.
“They should not fully rely on third-party or borrowers to provide information,” it added.
In February, Spanish police arrested five directors of China’s biggest bank Industrial and Commercial Bank of China (ICBC) as part of an investigation into alleged money laundering in its Madrid branch.
Fourth-largest lender Bank of China had said in March it is considering all its options in an Italian case in which it is alleged that billions of euros of illicit earnings were laundered through its Milan branch.
The CBRC also said lenders should strengthen internal control and compliance in their overseas branches, while improving accountability.
CBRC is an agency of the People’s Republic of China (PRC) authorised by the State Council to regulate the banking sector of the PRC except the territories of Hong Kong and Macau, both of which are special administrative regions.
In response to their swelling debt loads, undercapitalisation and non-transparent business practices, the government of China recapitalised the banks and set up the CBRC as the country’s independent banking regulator in 2003. Liu Mingkang was appointed its first chairman and served until 2011, when he was replaced by Shang Fulin.
Active in developing policies to promote financial inclusion, the Bank is a member of the Alliance for Financial Inclusion.