Foreign banks have the same obligations as their domestic
counterparts in the fight against money laundering, officials said
yesterday.
They were responding to concerns that the full opening-up of the
banking sector to foreign competition last week could facilitate
illegal money flows.
Foreign banks should report large and suspicious transactions,
and maintain records on clients and transactions, Cai Yilian,
deputy director of the central bank's anti-money laundering bureau,
told a news briefing yesterday.
Cai made it clear that foreign financial institutions in the
country are under the supervision of Chinese regulatory
authorities. "They shoulder the same responsibilities in anti-money
laundering as Chinese banks."
Rules released by the central bank last month defined large
transactions but did not specify if they applied to foreign banks,
which led to confusion in some quarters.
A single transaction exceeding 200,000 yuan (US$25,400) or a
transaction with a cumulative value of 200,000 yuan within a day
are defined as large. For foreign currencies, the sum is US$10,000
or its equivalent.
Britain's Standard Chartered Bank, one of the eight banks that
have applied to become the first foreign institutions licensed for
retail business in the Chinese currency, said it would strictly
follow the rules.
"We're very supportive and proactive in anti-money laundering,"
said Eva Chow, head of corporate communications of Standard
Chartered China, adding that the bank has developed a compulsory
training course for its staff.
Money laundering refers to the activities and financial
transactions that are undertaken to hide the illegal source of
income.
Han Hao, deputy director of the economic crime investigation
bureau under the Ministry of Public Security, said money laundering
in China is conducted mainly through financial institutions,
underground banks, online banks, cash smuggling, investment,
international trade, and securities and futures markets.
She said it is difficult to estimate the volume of the money
involved in the country, but globally, the International Monetary
Fund estimates it to be between 2 percent and 5 percent of global
GDP per year.
According to the China Anti-Money Laundering Monitoring and
Analysis Center, an office under the central bank set up in 2004,
683 suspected money laundering cases were reported to the police by
the end of 2005. They involved 137.8 billion yuan (US$17.2 billion)
and more than US$1 billion in foreign currencies.
The ministry yesterday also reported that seven cases of
underground banks were uncovered this year, with a turnover of
about 14 billion yuan (US$1.75 billion).
Forty-four suspects have been arrested in Guangdong, Shanghai,
Beijing, Inner Mongolia, Liaoning and Heilongjiang, and 58 million
yuan (US$7.4 million) has been seized or frozen, said Han.
The case unearthed in Shanghai in April, involving 5 billion
yuan (US$630 million), is the biggest ever in China.
A Singaporean is suspected of operating an underground bank and
illegally offering services including transfer and foreign exchange
between Singapore and 25 Chinese cities.
(China Daily December 20, 2006)