Financial Crime World

China’s Financial Crime Prevention Measures: A Decade of Progress and Challenges

During the past ten years, China’s Anti-Money Laundering (AML) efforts have made significant strides in the prevention and combat of financial crimes, with the Anti-Money Laundering Law of the People’s Republic of China serving as the governing framework.

##Significant Progress in AML and CTF initiatives##

The international and domestic landscape for AML and Counter-Terrorist Financing (CTF) has evolved significantly over the past decade. China, despite entering the scene late compared to developed countries and emerging economies, has shown resilience with strict regulations, considerable efforts, and a quick development pace.

##Establishing a Comprehensive AML Regulatory Framework##

Today, China has a well-defined regulatory framework, which includes:

  1. Legal Structures: A rigorous legislative system with criminalization of money laundering activities and a revised Criminal Law of the People’s Republic of China.
  2. Sound Mechanisms: Judicial interpretations strengthening the application of AML laws, international treaty participation, and a risk-based approach.
  3. Streamlined Operations: Effective implementation of AML obligations by regulated institutions leading to essential financial intelligence support.

##Recognition on the Global Stage##

In 2012, China became the 13th country to pass the Financial Action Task Force (FATF)’s third round of mutual assessment for AML and CTF, a recognition of its adherence and effectiveness in international AML standards.

##Strengthening the Legal Framework - Compliance with National and International Standards##

  1. Legislation: China revised its criminal law in 1997, criminalizing money laundering activities, and gradually improved its scope.
  2. Participation: China has been an active participant in international treaties related to AML/CTF.

##Strict Regulations and Supervision - Adherence to International Standards and Risk-Based Approach##

  1. Leading Role: The People’s Bank of China (PBC) has been responsible for AML regulatory efforts.
  2. Rules and Regulations: Clear guidelines for AML obligations for regulated institutions, including transaction reporting, due diligence, and record-keeping mechanisms.
  3. Compliance: Alignment with international standards set by the FATF.

##Smooth Operations - Collaboration and Information Sharing##

  1. Coordinated Efforts: The Joint Inter-Ministerial Conference for Anti-Money Laundering was established in 2004, coordinating efforts in eradicating the bases for money laundering at the national level.
  2. Regulation and Supervision Mechanisms: A clear division of responsibilities and smooth operations for effective investigations.
  3. Suspicious Transaction Analysis: China Anti-Money Laundering Monitoring and Analysis Center (CAMLMAC) handles Suspicious Transaction Reports and analyzes potential money laundering activities or predicate offenses.

##Efficient Intelligence Transfer and Analysis##

Since its establishment in 2004, CAMLMAC:

  1. Supporting the Prevention and Combat of Financial Crimes: Maintaining a significant presence with electronic data submission channels at over 2,600 regulated institutions.
  2. Effective Intelligence Analysis: Transferred and analyzed suspicious transaction intelligence leading to numerous investigations and seizures.

##Conclusion##

China’s ten-year journey in implementing its AML measures has been marked by consistent progress and adherence to international standards. However, challenges remain as China faces increasing cross-border financial crimes, terrorism financing, and internet finance growth. The PBC and related AML departments must continue adapting and evolving in their efforts to address these challenges head-on.