Financial Crime World

China’s Battle Against Money Laundering: Understanding the Offense and Its Constituent Characteristics

In the complex world of illicit financial activities, money laundering has emerged as a significant threat to the economic and social integrity of nations. China, which has witnessed a surge in money laundering cases since its reform and opening in 1978, is no exception.

Introduction

Money laundering, an act to disguise the illegal origin of proceeds, was not defined in China’s Criminal Code until its amendment in 1990. In this article, we delve into the concept and constituent characteristics of money laundering in China.

The Offense and Its Constituent Characteristics

From an objective perspective, money laundering in China is an act to cover up or conceal the source or nature of proceeds illegally obtained from:

  1. Drug-related offenses
  2. Terrorist offenses
  3. Offenses committed by mafias or smugglers

and gains derived therefrom. For an offense to be considered money laundering, there must be an intent to cover up or conceal the source or nature of the proceeds from these offenses.

There have been contrasting opinions regarding the scope of predicate offenses in the Chinese legal system. While some scholars believe the current scope is sufficient, others advocate expanding it to include all serious profit-generating offenses.

Consequence of Money Laundering

Money laundering poses various threats to society:

  1. Macroeconomic distortions and misallocation of capital and resources: Money laundering injects large, unpredictable, and uncontrollable funds into the financial system.
  2. Encouragement of criminal activities: Money laundering provides fuel for criminals engaged in drug trafficking, terrorism, arms dealing, and other illicit activities.

Conclusion

In conclusion, money laundering is a complex offense that involves the concealment of illegal proceeds’ origins and the transformation of illegally obtained currency into legitimate funds. Its potential to harm the financial system, hinder investigations, and provide funds for criminal activities emphasizes the importance of preventing and combating money laundering effectively.

Sources

  1. Chinese Government Publications
  2. International Financial and Legal Institutions
  3. Academic Journals and Research Papers.