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China Steps Up Efforts to Combat Cross-Border Money Laundering
In a bid to maintain pressure against cross-border money laundering activities, China’s central bank has strengthened its monitoring and analysis capabilities, enhanced intelligence sharing with investigating authorities and judiciary departments, and stepped up international cooperation.
Increasing Sophistication of Money Laundering Activities
According to the People’s Bank of China (PBC), money laundering activities through cross-border trade and investment have become increasingly sophisticated, often concealed by means of offshore accounts and “underground banks” or alternative remittance systems outside the formal regulatory system. To combat this threat, the PBC has launched a nationwide special operation to crack down on illegal and criminal activities.
Recent Operations
In 2015, the PBC, along with the Ministry of Public Security, Supreme People’s Court, Supreme People’s Procuratorate, and State Administration of Foreign Exchange, conducted a special operation to combat the use of offshore companies and underground banks for transferring illicit money. The operation uncovered 380 serious cases related to money laundering.
Enhancing AML Efforts
To impede the growth of money laundering activities linked to public-related economic crimes, the PBC has taken an active role in researching various types of money laundering crimes and summarizing case characteristics and red flags. The bank has also released risk notifications for opening accounts with other persons’ identity documents and accounts by specific groups related to public-related economic crimes.
International Cooperation
China has further strengthened its international exchange and cooperation on anti-money laundering and combating the financing of terrorism (AML/CFT) financial intelligence. The CAMLMAC has established formal AML/CFT information exchange and cooperation relationships with FIUs in 38 countries and regions, including South Korea, Russia, France, Japan, and New Zealand.
Bilateral Cooperation
In a significant development, the PBC signed a memorandum of understanding with FinCEN, the US financial intelligence unit, to establish bilateral AML intelligence cooperation. This marks China’s major achievement in establishing international cooperation on AML/CFT.
Priorities for AML Efforts
To respond to the growth of internet finance and associated challenges for AML, the PBC will continue to enhance its AML efforts, actively cooperate with counter-terrorism departments to monitor and freeze terrorist-related funds, track financial activities of terrorist groups and individuals, cut off funding sources, and safeguard national security.
Continuous Improvement
The PBC’s AML departments recognize that the country’s AML work faces increasingly sensitive and complicated environments at home and abroad due to the evolving international political and economic environment. To address these challenges, the bank will continue to improve and complete its AML system.
- Combating CFT will be of great importance for AML work, as terrorist attacks have struck major European countries, resulting in large casualties.
- The PBC will actively respond to the growth of internet finance and associated challenges for AML. The bank will accelerate the development of the AML system in key sectors of internet finance and gradually bring internet financial institutions into the AML supervision system.
- Combating public-related economic crimes will be a priority of AML work. Public-related economic crimes have severely disturbed the economic and social order, violated people’s property security, and resulted in huge losses to the country.
The PBC’s AML departments are committed to facing these difficulties and working to continuously improve and complete the AML system, ensuring the long-term health and stability of China’s financial sector.