State Council Launches Crackdown on Laundering, Freezing Funds
Combating Money Laundering and Terrorist Financing
In an effort to combat money laundering and terrorist financing, the State Council has launched a new initiative aimed at freezing funds suspected of being used for illicit activities.
Under the new measures, financial institutions will be required to temporarily freeze funds suspected of being laundered or used for terrorist financing. The investigation organ will then decide whether to continue freezing the funds, adopting measures as necessary under the Criminal Procedure Law.
Temporary Freeze Period
The temporary freeze period is capped at 48 hours. If a financial institution receives no notification on continued freezing from the investigation organ within that timeframe, it must immediately lift the freeze.
International Cooperation Key to Success
The State Council has also emphasized the importance of international cooperation in combating money laundering and terrorist financing. Article 27 of the new regulations states that China will work with other countries based on international treaties or principles of equality and reciprocity.
- The administrative department in charge of anti-money laundering under the State Council will represent the Chinese government in international cooperation.
- Information will be exchanged with foreign governments and relevant organizations to combat money laundering and terrorist financing.
Legal Consequences for Non-Compliance
The regulations also outline legal consequences for non-compliance. Article 30 states that staff members who fail to perform their duties or engage in misconduct can face administrative sanctions.
- Financial institutions must establish internal controls, designate special bodies, and conduct employee training on anti-money laundering measures.
- Failure to comply can result in rectification orders, disciplinary sanctions, or even fines.
Enhancing Supervision
The regulations also aim to enhance supervision over financial institutions. Article 32 outlines specific requirements for financial institutions to:
- Identify clients’ identities
- Preserve records of transactions
- Submit reports on large transactions
- Maintain confidentiality
Failure to comply with these requirements can result in rectification orders, fines, or even business suspension or license revocation.
Deterrent Measures
To deter non-compliance, the regulations also provide for criminal liability for individuals who violate the law. Article 33 states that individuals found guilty of money laundering or terrorist financing will be investigated and held criminally responsible according to law.
Effective Date
The new regulations come into effect on January 1, 2007, marking a significant step forward in China’s efforts to combat money laundering and terrorist financing.