Financial Crime World

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China’s Progress in Anti-Money Laundering and Counter-Terrorist Financing Measures

The People’s Republic of China has submitted its 1st Enhanced Follow-up Report to the Financial Action Task Force (FATF) on Anti-Money Laundering and Counter-Terrorist Financing Measures. This report assesses China’s progress in addressing technical compliance deficiencies identified in its Mutual Evaluation Report (MER) in 2019.

Technical Compliance Re-Rating

The FATF has re-rated China’s technical compliance with the FATF Recommendations as follows:

  • R.2: Compliant
    • Remains compliant
  • Upgraded to Largely Compliant (LC):
    • R.15
    • R.26
    • R.34
  • No Changes:
    • Remaining recommendations remain unchanged

Progress on Other Recommendations

China has reported progress on several other Recommendations rated Non-Compliant (NC) or Partially Compliant (PC). These include:

  • R.6 and R.7: Procedures Amended
    • Procedures amended to ensure implementation of UNSCRs without delay
  • R.8: Action Plan Developed
    • Action plan developed to conduct outreach and enhance training of NPOs to raise awareness of TF abuse risks
  • R.18: Guidelines Issued
    • Guidelines issued for the Management of Money Laundering and Terrorist Financing Risks of Financial Institutions, including a requirement to address internal control and training deficiencies
  • R.28: Notice Issued
    • Notice issued requiring all DNFBPs to implement AML/CFT obligations since July 2018
  • R.35: New Benchmark Implemented
    • New Benchmark of AML/CFT Sanctions implemented in 2019
  • R.38: New MLA Law Issued
    • New MLA Law issued to address relevant deficiencies

China’s Measures Against Virtual Assets

China has identified and assessed the ML/TF risks emerging from virtual asset activities, prohibited the use of virtual assets (VA) and VASPs in its jurisdiction, and taken steps to prevent payment channels from being used for VA transactions.

International Cooperation

China relies on existing forms of cooperation to provide international cooperation in relation to money laundering, predicate offenses, and terrorist financing relating to virtual assets. However, there are no specific examples of rapid cooperation put in place in respect of virtual assets.

Conclusion

Overall, China has made progress in addressing technical compliance deficiencies identified in its MER, sufficient to justify upgrading three Recommendations: R.15, R.26, and R.34. China will remain in enhanced follow-up and report back to the FATF on progress in October 2021.