Q: In recent years, the crime of money laundering has become a focus of concern in the international community. Reports say that each year nearly $10 billion is laundered in China. What does China have to say about this? What measures have been taken to crack down on money laundering? What achievements have been made?

A: As there are no detailed statistics on money laundering, it can't be confirmed that nearly US$10 billion a year is laundered in China. However, the amount of money laundered in China isn't as high as foreign estimates.

Of course, the issue can't be taken lightly. Due to China's strict foreign exchange control, laundered money often flows outside China. Money is usually laundered through financial channels in three ways. One way is through smuggling. Another is through transfer by means of price, in which people in China collude with foreign companies to export goods at lower prices and import goods at higher prices. Gains from the price difference will be deposited into overseas accounts. This is a common way of laundering money in many countries. The third way is to escape with huge amounts of money in the form of investments.

China has been attaching great importance to anti-money laundering efforts. In terms of anti-money laundering institutions, in 2001, the BOC, which has the most overseas branches, founded an anti-money laundering working committee. Following that, the People's Bank of China (PBC), China's central bank, the Ministry of Public Security and the State Foreign Exchange Administration set up anti-money laundering working institutions in succession. In April 2004, the China Anti-Money Laundering Monitoring and Analysis Center was established, specializing in the concentrated analysis of large amounts or abnormal capital-related activities.

In terms of legislation, China's Criminal Law clearly sets out "the crime of money laundering." Provisions including the Rules for Anti-Money Laundering by Financial Institutions, Administrative Rules for the Reporting of Large-Value and Suspicious RMB Payment Transactions and the Administrative Rules for the Reporting by Financial Institutions of Large-Value and Suspicious Foreign Exchange Transactions were put forth. Financial institutions have set up customer identification and investigation procedures, a transaction record keeping system, and a system for financial institutions to report substantial and suspicious transactions. According to these regulations, China's policy banks, commercial banks, credit cooperatives, post savings institutions, finance companies, investment and trust companies, financial leasing companies and foreign-funded financial institutions will all participate in fighting money laundering.

In the supervision of anti-money laundering efforts, the PBC organized a nationwide spot check. As of September 2004, 35 banks and their branches and 41 enterprises had been put on file and investigated for illegal transactions of foreign exchange settlements. At the same time, public security departments and foreign exchange administrative departments nationwide launched many joint activities, investigating a number of serious cases involving large amounts of money. The cases involved illegal activities such as dealing in the exchange of foreign currencies without authorization, evading foreign exchange control and engaging in arbitrage of foreign exchange, false investments, overseas gambling, swindling banks out of loans and transferring state-owned assets overseas.

As inter-border activities happen more and more frequently, money laundering has become an international problem. China has signed a series of international conventions against money laundering and against the financing of terrorism, such as the UN Convention Against Transnational Organized Crime, the International Convention for the Suppression of the Financing of Terrorism, and the UN Convention Against Corruption, and has also strengthened cooperation with relevant organizations in other countries. In October 2004, China, as a founding member country, joined the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), and also established a mutual cooperative mechanism with Russia, Hong Kong, Macao and other neighboring countries and regions. At the beginning of 2005, China was invited to be an observer of the Financial Action Task Force on Money Laundering (FATF) and the Asia-Pacific Group on Money Laundering (APG), and is making efforts to become formal members of these organizations in 2005.

Legislative procedures of the Anti-Money Laundering Law have started and the law is expected to be formally promulgated in 2005. All these actions are helping to weave a global network against money laundering, foiling criminal groups who attempt to violate China's interests through illegal private banks and black casework.