Financial Crime World

China Falls Short on Anti-Money Laundering and Counter-Terrorist Financing Efforts

The Financial Action Task Force (FATF) has published a scathing report criticizing China’s efforts to combat money laundering and terrorist financing. The report highlights several areas where the country needs to improve, emphasizing the need for decisive action to address these issues.

Key Findings of the Report

  • Insufficient understanding of risks: China’s financial institutions and non-financial businesses lack a sufficient understanding of the threats posed by money laundering and terrorist financing.
  • Limited knowledge of corporate structures: Individuals can easily hide behind corporate structures, making it difficult for authorities to identify those who ultimately own or control companies.
  • Weak financial intelligence unit: China’s financial intelligence unit needs to be reviewed and improved to effectively combat money laundering and terrorist financing.

Recommendations from the Report

  • Expand suspicious transaction reporting: Preventive measures such as suspicious transaction reporting should be extended to online lending institutions and designated non-financial businesses and professions.
  • Strengthen targeted financial sanctions: China’s legal framework needs to be fundamentally strengthened, and greater cooperation with financial institutions and designated non-financial businesses and professions is necessary.

Consequences of Failure

Experts warn that failure to address these issues could have serious consequences, including:

  • Damage to China’s reputation
  • Potential sanctions from international organizations