The authorities last year cracked down on more than 50 money
laundering cases involving more than 10 billion yuan (US$1.25
billion), the central bank said yesterday in a report.
The release of the report coincides with the second reading of
the draft anti-money laundering law by the Standing Committee of
the National People's Congress (NPC).
The law, the first of its kind in the country, is expected to
plug the legal loopholes in relation to money laundering with
clearer definitions of such activities and penalties.
It will also help build an efficient regulatory structure to
detect, monitor and prevent money laundering, experts said.
The number of cases solved last year was the same as in 2004,
but the amount involved was much higher; about two-and-a-half times
the 4 billion yuan (US$500 million) then.
Most of last year's cases were major crimes, according to the
report, which added that they were mainly concentrated in coastal
areas and provinces in the northeast and southwest, such as Yunnan,
Shandong, Guangdong, Shanghai, Zhejiang and Heilongjiang.
The People's Bank of China (PBC) also transferred 2,790
suspected cases involving 32.78 billion yuan (US$4.1 billion) to
the police last year; as did the State Administration of Foreign
Exchange, which referred 405 cases involving US$1.24 billion.
The central bank report, released for the second year running,
also highlights some challenges that the country faces, and cites
specific cases to illustrate the channels, impact and trend of such
illegal practices.
A major channel is transactions through illegal money exchange
vendors or underground banks, or qianzhuang as they are called in
Chinese.
Financial regulators joined hands with police to crack down on
47 illegal money changers and lenders last year and arrested 165
suspects. Cash amounts involved were up to 10 billion yuan (US$1.25
billion).
As for the draft anti-money laundering law, a source close to
the matter said if there are no major objections during the current
debate, it is possible that the draft will be sent for a third
reading this year before it is approved.
Xiang Junbo, vice-governor of the PBC and head of its Shanghai
headquarters, said that in addition to the law, three anti-money
laundering regulations targeting the banking, securities and
futures, and insurance sectors will be released in the second half
of the year, thereby expanding the fight to the latter two
sectors.
Most of the information on suspected "dirty money" is first
submitted to the Anti-money Laundering Monitoring and Analysis
Center of the PBC. Apart from regular reports from commercial
banks, rural credit cooperatives and other banking institutions,
the public is also encouraged to report suspicious activities to
the center.
Last year, the center received 283,400 reports of suspicious
renminbi funds and about two million involving suspicious foreign
exchange transactions.
Money laundering is already an offence under China's criminal
law.
The State Council, China's cabinet, has also issued regulations
governing cash management, penalties for financial irregularities
and illegal financial organizations.
It is mandatory for individuals to use their real names to open
deposit accounts.
Apart from underground banking and illegal foreign exchange
bureaux, money laundering cases mainly involve the embezzlement of
public funds, drug smuggling, and illegal lotteries.
(China Daily August 25, 2006)