CRI听力:Banks Should Tighten Risk Controls in Overseas Branches: CBRC

Guo Tianyong, a professor from China's Central University of Finance and Economics, explained the need for the tightening of supervision of the banks' overseas branches.

"Since the overseas branches are quite far away from our country, and the supervision environment and laws differ greatly from those in China, it's necessary to strengthen the risk controls and management towards our sub-branches abroad, in case unexpected incidents could cause negative effects on our domestic banks' reputation and operation."

The statement issued by the China Banking Regulatory Commission includes 21 specific demands and covers a variety of aspects, such as ensuring that adequate checks are carried out on clients when it comes to granting loans.

Banks should also clarify the responsibilities of staff working in their overseas branches, and also strengthen risk judgment as well as internal control and compliance.

The Commission adds that the "know your customer" requirements should also be strictly followed and banks should not fully depend on third-party or borrowers to provide information.

The statement came as a number of the overseas branches of China's top banks come under foreign scrutiny for alleged illegal behaviors.

Earlier in February, an investigation was launched into alleged money laundering at the Madrid branch of Industrial and Commercial Bank of China in Spain, which saw 5 directors detained.

Meantime, the UK's Financial Conduct Authority has also tightened its supervision in relation to alleged "financial crimes" concerning the London branches of several Chinese banks.

Zhao Xijun, a professor from Renmin University of China, said the overseas sub-branches of China's lenders will face a variety of challenges as their business and markets expand.

"As can be clear to all, many supervision and judicial authorities have launched probes on our lenders' branches abroad. So how we cope with the various challenges we face has become a more and more important issue in the internationalization of our financial institutions and commercial banks."

The China Banking Regulatory Commission notes in the statement that facing that challenges, it's clear communications between lenders and the supervision authorities abroad need to be enhanced, and sub-branches themselves will need to abide by the local laws and regulations.

For CRI, I'm Xie Cheng.