Financial Crime World

China Tightens Enforcement of Anti-Money Laundering and Combating Terrorism Laws, Experts Warn

The Chinese government is stepping up its efforts to combat money laundering and the financing of terrorism by strengthening enforcement of anti-money laundering (AML) and combating the financing of terrorism (CFT) laws. According to experts, this move is aimed at ensuring compliance with AML/CFT regulations, which carry severe penalties for non-compliance.

Evolution of AML/CFT Regulatory Processes in China

Speaking at the Asia GRC Exchange conference in Shanghai on April 19, 2013, attorney Xingjian “Jeff” Zhao emphasized that AML/CFT regulatory processes in China are still evolving. He stressed that local and foreign institutions operating in China must prioritize compliance with these requirements, which include:

  • Legislative Reform: Strengthening laws and regulations to combat money laundering and terrorist financing
  • Strengthened Enforcement Mechanisms: Increasing penalties for non-compliance and improving monitoring and reporting systems
  • International Cooperation Initiatives: Enhancing cooperation between China and other countries to share information and best practices

Key Requirements for Compliance

Zhao highlighted the importance of:

  • Monthly Reports: Detailed reports on suspicious activities, including cash transactions, must be submitted by banks and financial institutions
  • Transaction Records Retention: Transaction records must be retained for a minimum of five years
  • Cash Transactions Reporting: Cash transfers, exchanges, and other cash-based transactions must be included in AML reporting requirements

Non-compliance with these regulations will result in stiff penalties, both civil and criminal.

Urgent Need for Local Expertise

Zhao also urged the Chinese government to prioritize establishing local expertise on AML/CFT laws and regulations. He warned that failure to comply with these regulations can have severe consequences, including:

  • Reputational Damage: Loss of reputation and trust among customers and stakeholders
  • Financial Losses: Significant financial penalties and potential loss of business

Asia GRC Exchange Conference

The Asia GRC Exchange conference brought together experts from multinational companies, law firms, and government agencies to share best practices and strategies for:

  • Risk Management: Identifying and mitigating risks in the Chinese market
  • Internal Audit: Conducting regular internal audits to ensure compliance with AML/CFT regulations
  • Corporate Compliance: Implementing effective corporate compliance programs to prevent non-compliance

By strengthening enforcement of AML/CFT laws, China aims to protect its financial system from illegal activities and maintain a reputation as a responsible player in the global economy.