China preps for clampdown on financial crimes with new version of anti-money-laundering law
China narrowly passed the fourth round of assessments in 2019. The review stated some Chinese financial institutions had weak obligations in the control of money laundering, and the overall system lacks transparency regarding legal arrangements.
China’s central bank had previously warned the risk of money laundering remains high in the country as well as Southeast Asia, emphasising the need to address loopholes in compliance management and improve regulatory technology to handle the complex nature of financial crimes and the burgeoning fintech sector.
The as yet unpublished draft would also bolster the supervision and management of anti-money-laundering operations, advance provisions of obligations and clarify the scope of non-financial institutions that must comply with the law, Xinhua said.
The fifth review is still going to be challenging to the country and its financial industry
Pan noted the revision is based on a “risk-centric” principle and protects “national security”, coordinates “development and safety” and will “perfect” the anti-money-laundering system.
In a report released last year, the consultancy Oliver Wyman said the fifth-round assessment by the Financial Action Task Force will focus on “effectiveness” and “results”.
“Although the fourth examination has affirmed certain work from China, like new technology, internal control, telegraphic transfer, non-profit organisations and financing of terrorism and proliferation, the fifth review is still going to be challenging to the country and its financial industry,” said Qian Hang, a partner at Oliver Wyman.
He suggested Chinese financial institutions “raise consciousness” on fulfilling their obligations and use the fifth review period to examine weak links and upgrade their operations before the task force’s field work begins in 2025.