News

Dear Valued Clients,

Thank you for your continued support and partnership.

We have noticed that recently, some clients, due to foreign exchange controls in their countries or cost considerations regarding currency conversion, prefer to make payments in Chinese Yuan (CNY) through unofficial or indirect channels (such as certain thirdparty currency exchange agencies or individuals), or use personal accounts via platforms like Alipay.

We must seriously remind you that such payment methods carry significant legal and financial risks. According to China's current AntiMoney Laundering and financial regulatory laws:

1.  Fund Nature Risk: CNY funds transferred through channels lacking a legitimate trade background may be identified by judicial authorities or bank risk control systems as "funds of unknown origin" or suspected of being involved in illegal activities (e.g., money laundering). This can result in the funds being fully frozen or even confiscated by law.

2.  Account Risk: The company account receiving such funds, along with associated accounts, may be frozen by public security authorities or banks, severely disrupting our normal operations and business with other clients.

3.  Taxation Risk: Payments made through irregular channels cannot provide legal commercial payment documentation, preventing us from completing compliant tax declarations and leading to serious tax violations.

To ensure the stability and security of our cooperation and avoid unnecessary losses, we hereby formally declare and reiterate our payment requirements:

The only compliant payment methods are as follows:

   Currency: US Dollars (USD), Euros (EUR), or Chinese Yuan (CNY) transferred directly from your company's (the payer's) official corporate bank account.

   Channel: Payment must be made via a direct telegraphic transfer (TT) from your company's official bank account to our designated corporate account for the corresponding currency.

   Requirement: The remittance information must clearly state our invoice number and relevant transaction details.

We are unable to accept and explicitly prohibit the following payment methods:

   CNY payments made through any underground banks or unlicensed exchange institutions.

   Payments in CNY or foreign currency made through any personal bank account or thirdparty company account.

   Payments made via personaltopersonal (P2P) mobile payment platforms such as Alipay or WeChat Pay，May The payer is a blacklisted account or has incomplete information, and is suspected of money laundering.

If our account is frozen or funds are lost due to the client's use of noncompliant payment methods, all responsibility and consequences (including but not limited to loss of payment, losses due to order delays, costs related to account unfreezing, etc.) shall be borne by the paying client.

We kindly urge you to understand and adhere to the above requirements and complete payments through formal banking channels. This is not only a requirement for complying with Chinese law but also a fundamental measure to protect the business interests and longterm cooperative relationship of both parties.

Should you have any questions, please do not hesitate to contact your sales representative or our finance department.

Thank you for your understanding and cooperation.

WEI HUA INTL LTD

On July 26th, the People's Bank of China (PBOC) consecutively published (or updated) four documents on its official website. These documents mandate that various financial institutions enhance the effectiveness of their antimoney laundering (AML) and counterterrorist financing (CFT) efforts to prevent related risks.

The four documents are:

   Circular of the General Office of the People's Bank of China on Further Strengthening AntiMoney Laundering and CounterTerrorist Financing Work (Yin Ban Fa [2018] No. 130)

   Circular of the General Office of the People's Bank of China on Strengthening AntiMoney Laundering Supervision of Designated NonFinancial Businesses and Professions (Yin Ban Fa [2018] No. 120)

   Circular of the People's Bank of China on Further Issues Concerning the Identification of Beneficial Owners (Yin Fa [2018] No. 164)

   Circular of the People's Bank of China on Strengthening Customer Due Diligence for AntiMoney Laundering Purposes (Yin Fa [2017] No. 235)

Among these, Document No. 130 serves as the overarching guiding principle for AML work, while the other three are more detailed implementing rules. However, the overall regulatory tone of all four documents is consistent: they require obligated institutions to strengthen the management of customer and beneficial owner identification. This is the foundation and core of AML work for obligated institutions.

What is Customer Identification?

In AML work, the Customer Identification system, along with the systems for Reporting LargeValue and Suspicious Transactions and for Preserving Customer Identity Data and Transaction Records, constitute the three fundamental preventative measures against money laundering recognized by international AML standards and national legislation. They are also the "Three Core AML Obligations" that obligated entities must fulfill, with Customer Identification being the most fundamental.

Customer Identification, also known as "Know Your Customer" (KYC) or "Customer Due Diligence" (CDD), refers to the measures taken when establishing a business relationship with a customer or providing financial services. Based on the customer's specific money laundering or terrorist financing risk characteristics, these measures aim to verify the customer's true identity, understand and pay attention to their occupation or business background, the purpose and nature of transactions, as well as the source of funds, use of funds, and the actual beneficiaries. The Customer Identification system prohibits obligated entities from providing services to or conducting transactions with customers whose identity is unknown.

How to Conduct Customer IdentificationFinancial institutions should follow the principles of diligence, "Know Your Customer", riskbased approach, and confidentiality when conducting Customer Identification. A complete Customer Identification process includes understanding, verifying, recording, and retaining information. Each step should adhere to the following five basic requirements:

1.  Principle of Authenticity: Assess whether the customer matches the identification document, judge the authenticity of the customer's identity information, and analyze whether the stated occupation and income match their financial assets.

2.  Principle of Validity: On one hand, the identification documents provided by the customer must be issued by competent authorities and have legal effect. On the other hand, these documents must be within their validity period.

3.  Principle of Completeness: Requires financial institutions to fully and comprehensively fulfill their legal obligations regarding information collection and document preservation throughout the processes of understanding, verifying, recording, and retaining.

4.  Principle of Continuity: During the ongoing business relationship, if significant changes occur in the customer's identity information or business situation that may render previously obtained information inaccurate, financial institutions should verify the new or changed information to confirm and retain current, true, and valid details.

5.  Principle of Differentiation: Financial institutions should adhere to a "riskbased" principle during Customer Identification, allocating resources according to risk levels. Enhanced Customer Identification measures should be applied to highrisk customers, while simplified measures may be allowed for lowrisk situations.

What Information Should Customer Identification Cover?

   Identification of Natural Person Customers:

       Name, gender, nationality, occupation, residential address or workplace address, contact information.

       Type, number, and validity period of identity documents or proof.

       If the registered residence differs from the habitual residence, the habitual residence should be recorded.

   Identification of NonNatural Person Customers (Legal Persons, Other Organizations, and Individual Businesses):

       Name, domicile, business scope, organization code, tax registration number.

       Name, number, and validity period of licenses, certificates, or documents proving legal establishment or lawful operation.

       Partnership agreements, trust deeds, memoranda, articles of association, appointment documents, other documents verifying customer identity.

       Name, nationality, type/number/validity of identity documents, contact information, address, and shareholding status for controlling shareholders or actual controllers, beneficial owners, legal representatives, responsible persons, and authorized personnel handling business.

   Requirements for Identifying Beneficial Owners of NonNatural Person Customers:

    Obligated institutions should determine the beneficial owner by delving layer by layer based on the legal form and actual circumstances of the nonnatural person customer. According to regulations, each nonnatural person customer must have at least one identified beneficial owner. Specific criteria are as follows:

    1.  Company: Determine in this order: a) Natural person(s) directly/indirectly owning over 25% of equity or voting rights; b) Natural person(s) controlling the company through personnel, financial, or other means; c) Senior management.

    2.  Partnership: Natural person(s) holding over 25% of partnership interests.

    3.  Trust: The settlor, trustee, beneficiary(ies), and other natural person(s) exercising ultimate effective control over the trust.

    4.  Fund: Natural person(s) holding over 25% of equity or otherwise controlling the fund. For situations not explicitly listed, such as wealth management products, asset management plans, employee stock ownership plans, etc., obligated institutions may refer to the fund criteria.

   Identification of Specific Natural Person Customers (e.g., Politically Exposed Persons  PEPs):

    1.  For foreign PEPs, obligated institutions must implement enhanced measures in addition to normal CDD:

           Establish an appropriate risk management system to determine if a customer is a foreign PEP.

           Obtain senior management approval/authorization before establishing (or maintaining) a business relationship.

           Conduct enhanced due diligence into the customer's assets and source of funds.

           Increase the frequency and intensity of transaction monitoring during the business relationship.

    2.  For senior management of international organizations, obligated institutions should apply the enhanced measures listed in items 24 above when providing services or handling business presents higher risks.

    3.  The requirements for identifying these specific natural persons also apply to their close associates.

    4.  If the beneficial owner of a nonnatural person customer is such a specific natural person, obligated institutions should apply corresponding enhanced identification measures to that nonnatural person customer.

The Significance of Customer Identification

1.  Verifying True Identity: Enables financial institutions to understand the basic identity information of their clients, building a foundational database of customer information that is authentic, complete, and comprehensive. This provides essential information support for ensuring the legality of financial instrument usage.

2.  Effective Customer Recognition: Provides richer foundational data for financial institutions to analyze suspicious transactions, ensuring the reasonableness of monitoring and analysis conclusions and enhancing the effectiveness of fund monitoring.

3.  Conducting Customer Due Diligence: Helps improve the accuracy of customer money laundering risk assessments, thereby allowing for the rational allocation of AML resources and focused scrutiny of highrisk customer groups.

Without an effective Customer Identification system, identifying and reporting suspicious transactions would be impossible. By identifying customers, understanding and monitoring their transactions, investigating suspected suspicious transactions and terrorist financing activities, and providing comprehensive and effective information to relevant authorities, it helps deter money laundering and its predicate crimes, trace and confiscate criminal proceeds, and maintain economic security and social stability.