Financial Crime World

China’s AML Framework: A Key Player in the Global Fight Against Wildlife Trafficking and Money Laundering

The United Nations (UN) General Assembly’s 2019 resolutions on wildlife crime underscored the significance of this illicit activity’s high profitability and transnational nature. Recognizing illegal wildlife trade (IWT) as a predicate offense for money laundering can strengthen the global response to this complex issue. However, the practical application of these laws in investigations and prosecutions remains limited, particularly in China.

This article provides insights from a report by TRAFFIC, the leading non-governmental organization focusing on wildlife trade. The report titled" “A Review of China’s Anti-Money Laundering Laws on Combating the Illegal Trade in Wild Species: A Comparative Analysis of National Legislations in the United States, the United Kingdom, and China,” highlights the challenges and potential solutions for enhancing China’s Anti-Money Laundering (AML) framework to tackle wildlife-related crimes.

Challenges in China’s Current AML Framework

Legislation and enforcement

  • Only seven crimes are considered predicate offenses for money laundering in China.
  • Broad wildlife crimes like poaching, illegal logging, and illegal scaling are not explicitly addressed, limiting investigators’ capabilities.
  • Rules regarding asset recovery after conviction are yet to be fully established.
  • Lack of engagement with overseas financial institutions makes it difficult to trace or investigate funds moving overseas.

Supervision and Administration

  • China’s financial compliance system covers fewer high-risk sectors for money laundering.
  • Reliance on large and suspicious reports and lack of public-private engagement hinder detection through non-financial institutions.
  • Improvement of information sharing between sectors is essential for effective detection and investigation.

International cooperation

  • China may face constraints in international financial intelligence exchange through a few bilateral agreements.
  • International police cooperation channels, such as INTERPOL alerts and police liaison requests, offer primary approaches.
  • Legal impediments and disincentives for foreign law enforcement officials can obstruct effective international cooperation.

Potential Solutions

  • Enactment of the Draft Amendment: Emphasizes tackling money laundering across all industries and broadens organizations’ AML obligations.
  • Provisions for extraterritorial reach and engagement with overseas financial institutions.
  • Strengthening communication and financial intelligence sharing: Between departments, public and private sectors, and internationally.
  • Improvement of international cooperation mechanisms: Creating efficient systems and effective international cooperation experiences.

Recommendations

  • Passage and enactment of the Draft Amendment to expand predicate criminal acts.
  • Enhanced communication and financial intelligence sharing between relevant sectors.
  • Improvement of international cooperation mechanisms and mechanisms to handle requests for judicial assistance.
  • Law enforcement agencies: Developing awareness and capacity to identify and detect concealed illicit items andconduct financial investigations.
  • Financial and designated non-financial institutions: Enhancing the ability to monitor and identify suspicious transactions in IWT cases and use international criminal justice channels.

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[Authors] This article was contributed to by Anne-Marie Weeden (Senior Research Fellow, RUSI) and Stephanie Pendry (Senior Advisor, Information and Enforcement Support, TRAFFIC). The original report was penned by Linda Chou (AML project manager of TRAFFIC China Programme).