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Print articleChina: New Anti-Money Laundering Law
July, 2007 -
The Anti-money Laundering Law of the People’s Republic of China was adopted at the 24th Meeting of the Standing Committee of the Tenth National People’s Congress on 31 October 2006. Effective from 1 January 2007, the Law defines the institutions responsible for monitoring and investigating money laundering and the means at their disposal, and outlines the obligations financial institutions and certain non-financial institutions must shoulder in order to combat money laundering.
Definition and administration
Anti-money laundering measures are defined in the Law as those enacted to prevent any financial activity for the purpose of concealing or disguising the source and nature of criminal proceeds from narcotics, organised crime, terrorism, smuggling, corruption, bribery, fraud, undermining of financial management, etc.
The Law bestows the authority to organise anti-money laundering work nationwide on the “administration in charge of anti-money laundering under the State Council”. Although not stated in the Law, the People’s Bank of China (“PBOC”) is currently invested with this authority. The PBOC and its local branches are to exercise the key administrative role in China’s anti-money laundering efforts and they will be assisted by other government authorities such as Customs and the banking regulatory authority within the scope of their respective jurisdictions.
Obligations of financial institutions
All financial institutions in China must have anti-money laundering departments and must maintain records of their customers’ identity and transactions for a set period of time. If the financial institutions find an especially large or suspicious transaction, they are to report the transaction immediately to the Anti- Money Laundering Monitoring and
Analysis Centre under the PBOC. Any worker or institution submitting information regarding money laundering is also granted legal protection under the Law, and all information submitted shall be kept confidential and used only for the money laundering investigation.
Investigations
The PBOC and its provincial branch offices have been granted wide powers to investigate any suspect transactions and to compel financial institutions to cooperate with these investigations under the new Law. A temporary freeze may be placed on suspected accounts from which funds are to be transferred overseas. Further investigation shall determine
whether or not to continue the freeze.
International cooperation
According to the Law, the PRC shall begin to develop international cooperation to combat money laundering in accordance with international treaties or on the basis of the principle of reciprocity. The PBOC shall cooperate with foreign governments and related international organisations in combating money laundering, and shall exchange money launderingrelated data and information with relevant foreign anti-money laundering institutions.
Definition and administration
Anti-money laundering measures are defined in the Law as those enacted to prevent any financial activity for the purpose of concealing or disguising the source and nature of criminal proceeds from narcotics, organised crime, terrorism, smuggling, corruption, bribery, fraud, undermining of financial management, etc.
The Law bestows the authority to organise anti-money laundering work nationwide on the “administration in charge of anti-money laundering under the State Council”. Although not stated in the Law, the People’s Bank of China (“PBOC”) is currently invested with this authority. The PBOC and its local branches are to exercise the key administrative role in China’s anti-money laundering efforts and they will be assisted by other government authorities such as Customs and the banking regulatory authority within the scope of their respective jurisdictions.
Obligations of financial institutions
All financial institutions in China must have anti-money laundering departments and must maintain records of their customers’ identity and transactions for a set period of time. If the financial institutions find an especially large or suspicious transaction, they are to report the transaction immediately to the Anti- Money Laundering Monitoring and
Analysis Centre under the PBOC. Any worker or institution submitting information regarding money laundering is also granted legal protection under the Law, and all information submitted shall be kept confidential and used only for the money laundering investigation.
Investigations
The PBOC and its provincial branch offices have been granted wide powers to investigate any suspect transactions and to compel financial institutions to cooperate with these investigations under the new Law. A temporary freeze may be placed on suspected accounts from which funds are to be transferred overseas. Further investigation shall determine
whether or not to continue the freeze.
International cooperation
According to the Law, the PRC shall begin to develop international cooperation to combat money laundering in accordance with international treaties or on the basis of the principle of reciprocity. The PBOC shall cooperate with foreign governments and related international organisations in combating money laundering, and shall exchange money launderingrelated data and information with relevant foreign anti-money laundering institutions.
