China threatens money launderers with higher fines
PENG QINQIN and LIAO ZHAOLONG, 03 June 2021
China is planning to beef up its law against money laundering with higher fines and a broader scope, according to a draft revision that would be the first update to the law in more than 14 years.
The People’s Bank of China (PBOC) on Tuesday released a draft of the revised Anti-Money Laundering Law that aims to adapt to changing financial practices and growing money laundering risks at home and abroad.
The revision would extend the scope of the law, which came into effect in 2007, to improve enforcement against terrorist financing and stipulate nonfinancial parties’ obligations in preventing money laundering. It would also increase fines for violating the law and failing to comply with preventive measures.
The draft says the law would also apply to any foreign money laundering and terrorist financing activity that threatens China’s national security, its financial stability or the rights of Chinese citizens and organizations. It would also require foreign financial institutions to cooperate with money laundering investigations or risk getting blacklisted.
Under the revision, China could introduce a list of countries and regions where the risk of money laundering and terrorist financing is high.
In addition to traditional financial institutions such as banks and insurers, the draft clarifies that nonbank payment companies and online micro lenders, as well as nonfinancial institutions — including real estate agencies and developers, accounting firms and precious metal exchanges — would also be required to adopt control and monitoring measures to prevent money laundering by their clients.
These proposed rules are consistent with those that financial regulators proposed in a draft regulation on March 31. That draft was created in response to the shortcomings in enforcement of the law that the Financial Action Task Force identified in separate reports in 2019 and 2020. China is due to report its progress this year to the task force in October.
