Financial Crime World

China Strengthens Financial Crime Prevention with Revamped Anti-Money-Laundering Law

China is making significant strides to bolster its financial crime prevention measures by revising its anti-money-laundering (AML) law. The Standing Committee of the National People’s Congress is currently reviewing the new version of the law.

Expanding the Scope of AML Regulations

The revised AML law is expected to cover digital currencies, bitcoin, and non-financial institutions to help close loopholes and reduce the risks posed by these sectors. According to Xinhua, Pan Gongsheng, the Governor of the People’s Bank of China, emphasized the importance of updating China’s AML regulations to meet the country’s changing needs and international requirements.

Key Points:

  • China’s top legislative body is revising the AML law.
  • The new law will expand coverage to digital currencies, bitcoin, and non-financial institutions.
  • The regulation update aims to address weaknesses and align with international standards.

Closing Loopholes and Enhancing Compliance

The changes in the new AML regulation are expected to help strengthen China’s financial system and national security by closing gaps related to digital currencies and non-financial institutions. This is essential given China’s upcoming fifth assessment by the Financial Action Task Force (FATF), which is an international organization focused on combating money laundering and the financing of terrorism.

Impact on Financial Institutions:

  • Stronger internal control mechanisms.
  • Implementation of due diligence procedures.
  • Maintenance of identity information and transaction records.
  • Establishment of a new organ to monitor and analyze large and suspicious transactions.

Complying with FATF Recommendations

Chinese financial institutions have already increased their reporting to the central bank in recent years to comply with FATF recommendations, and the new law is expected to further bolster AML operations.

FATF Assessment Challenges:

  • Effectiveness and results will be the primary focus.
  • Closer cooperation with other countries.
  • Combating cross-border crimes, particularly in Southeast Asia.

Conclusion

The upcoming revised AML law in China represents an essential step in strengthening the country’s financial crime prevention measures. These changes aim to meet domestic requirements and international standards while addressing the persistent risks associated with digital currencies and non-financial institutions. With the fifth assessment by the FATF looming, it is crucial for China and its financial industry to work together and address the challenges that this assessment will present.