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.