Chinese Central Bank Requiring Extreme Customer Verifications at Exchanges

Chinese Central Bank Requiring Extreme Customer Verifications at Exchanges

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A leading Chinese bitcoin exchange, Huobi, reportedly sent a letter to some of its customers to inform them of yet another set of new Anti-money laundering (AML) requirements. These customers are now required to provide explicit details and proof of the sources of their funds, destinations of bitcoins or other cryptocurrencies withdrawn, as well as their purposes for withdrawing.

Also read: PBOC Lists New Rules for Chinese Bitcoin Exchanges

New AML Requirements

Huobi confirmed to Bitcoin.com that this letter was sent to some customers whose accounts are potentially vulnerable to money laundering. In its letter, the exchange cites AML regulations imposed by Chinese regulators including the People’s Bank of China (PBOC) and China Banking Regulatory Commission. Customers of Huobi, and Chinese Bitcoin Exchanges Requiring Extreme AML Customer Verificationspotentially of all Chinese bitcoin exchanges, falling into this category must now provide:

1. Account information used to log in at the exchange.
2. Explanations and evidence of the sources of their deposits.
3. Destinations and evidence of the bitcoins or other cryptocurrencies withdrawn.
4. Explanations of the purposes of their withdrawals.

In an unprecedented move against privacy, all documents and proof submitted will be sent to the National Archives, the letter informs customers, adding that they will need to certify that all information and proof provided are authentic.

Required: Proof of Funding Sources

As proof of their funds, Huobi is asking their customers for a detailed list of historical transactions from the customer’s bank account used to deposit funds at the exchange. The burdensome requirements include: Chinese Bitcoin Exchanges Requiring Extreme AML Customer Verifications

1. The bank transfer records to the exchange’s account.
2. Written explanations of the sources of the funds transferred.
3. Screen captures and other relevant proof that can back up the explanations given above.

The letter suggests providing a historical record of items matching the deposit amount such as monthly salary, money withdrawn from other platforms or money borrowed from friends. For borrowed funds, IOU documents would need to be attached as proof. Wechat screenshots are acceptable evidence as well.

Required: Withdrawal Destinations & Purposes

The destinations of all cryptocurrency withdrawn will also be under the spotlight. Customers need to declare where the coins will be sent to, such as to a personal wallet or Chinese Bitcoin Exchanges Requiring Extreme AML Customer Verificationsanother platform. For example, screenshot evidence of the deposit pages of other platforms showing matching customers’ names and addresses are needed. The purposes for withdrawal, such as to use them for financial investment or arbitrage, must also be declared.

The exchange then warned their customers that the funds used to participate in illegal fundraising will not be protected by law and customers will bear the risks and responsibilities by themselves. It is also illegal to participate in money laundering and pyramid schemes, the letter states. Customers were also told that they would be held responsible for engaging in such activities.

Moving the Market Underground

The move is the latest in a long series of new regulations imposed by the PBOC this year on bitcoin exchanges. In mid-February, the Bank applied several new rules, including the end of zero-fee bitcoin trading in the country. This resulted in a large number of customers leaving those exchanges to purchase their bitcoins in underground markets like Localbitcoins.com.

Chinese Bitcoin Exchanges Requiring Extreme AML Customer Verifications

Early this month, the PBOC listed a long set of rules for Chinese bitcoin exchanges to follow, and more guidelines have kept piling up since. Zhou Xuedong, a PBOC director whose department carried out the inspections of Chinese bitcoin exchanges early this year, said that the bank would concentrate on AML regulations of exchanges’ customers. Last week, bitcoin exchanges reportedly added an on-site identity verification requirement, including an in-person visit, to deposit or withdraw 50,000 yuan or more.

What do you think of the new requirements on customers of Chinese bitcoin exchanges? Let us know in the comments section below.


Images courtesy of Shutterstock, Coin.dance, PBOC, and Huobi


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  • Black Pirate

    Today is the day were centralized exchanges lost the battle with government and the public. Decentralized exchanges with smart contract are starting to make sense such as bitsquare technology. Moving decentralized assets to centralized location renders the coins to centralized assets. Smart contract is the only solution to these problem.

  • Martin C

    big brother MAO would be so proud of these commie aholes. In one fell swoop they just declared war on bitcoin and guess who is gonna lose? goodbye exchanges hello localbotcoins and p2p exchanges. Bitcoin can never be stopped or taxed or molded or overregulated , that is why it was created. These fools just cut their own throat. Bitcoin is free and can not be dictated to by commie bastards.

  • Stanley Bernard

    When they start telling the miners that they must MIne the new digital Yuan Bitcoin is over anyway. If you cant see that then you are not looking hard enough. Bitcoin is over. Ethereum and Dash are going to take a large % of this market and when the hard fork away to a new POW format happens it will be confirmation of the end.
    Blockstream & Core started the work and the PBOC will finish. Ethereum is on sale now at a decentralised exchange near you. Open Ledger/Shapeshift/EtherEx. 0xff2cd6baAB065cED1B729bc89EdAb8A907849F9c

    • Tracer289

      Excellent pump!! Oops… I mean… buy dash and other alts. Bitcoin is dead again!!!!

      • Stanley Bernard

        Its been declared dead too many times but at this time its being wounded by 1000 small cuts. The BU activation will happen and the Hashpower to support Bitcoin Core does not currently exist so a Proof of Work change must be made or Bitcoin Core as a minority hashpower blockchain will not survive.

        • jax

          if you don’t have anything real and relevant to say then please just shut up. you are just a waste of comment space

    • ablerk

      So none of that can happen to any other coin because they’re ‘special’, right?

      • Stanley Bernard

        The mining concentration that exists inside of China is unique.

        • True, but there’s cheap power in other jurisdictions as well (Abkasia, Paraguay, etc), mining can be setup in these locations to compensate for the loss of China.

          • Siknight

            you forget who makes the mining rigs and has monopolised the sale of these rigs.
            The fact is the chinese want to manipulate bitcoin from the mining to the exchanging to the spending of it.

          • You reckon they know how to do that, or are they taking their cues from the west?

  • richardamullens

    While this is definitely onerous, it will be expected and people will cope with it. I would be very surprised if nefarious operators used the exchanges anyway. They certainly won’t now.

  • China copies the legacy west (Coinbase) again, huh?