China's measures to combat money laundering and terrorist financing

Publication details

Language

English

Country

China

Mutual Evaluation Report of China - 2019

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MER-China-2019.pdf
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4 MB
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Paris, 17 April 2019– The FATF today published a report on the anti-money laundering and counter-terrorist financing (AML/CFT) system of the People’s Republic of China (China).  

The International Monetary Fund staff-led assessment comprehensively reviews the effectiveness of China’s measures and their level of compliance with the FATF Recommendations. The FATF adopted this report at its February 2019 Plenary meeting.

Overall, China has a strong understanding of the money laundering and terrorist financing risks it faces, but it should focus more on the laundering of proceeds of crime and increase the range of sources used for its national risk assessment.

Financial institutions and non-financial institutions have an insufficient understanding of the risks they face, and while the People’s Bank of China has a good understanding of how its financial institutions could be abused by criminals and terrorists, it has little to no understanding of the risks facing non-financial businesses and professions.

Hiding the persons who ultimately own or control a legal entity is facilitated by fundamental legal shortcomings and effectiveness issues. This deficiency also notably affects efforts to address corruption.

China is committed to pursuing and confiscating criminal proceeds through both criminal and administrative proceedings, but it should review the functioning and operational independence of its financial intelligence unit and improve the use of financial intelligence to drive money-laundering investigations.

China should extend preventive measures, including reporting of suspicious transactions, to designated non-financial businesses and professions and online lending institutions and introduce requirements on domestic politically exposed persons.

Targeted financial sanctions related to both terrorist financing and proliferation financing is poor, and China should fundamentally strengthen its legal framework and the implementation of these United Nations-mandated sanction regimes and work with financial institutions and designated non-financial businesses and professions to achieve implementation without delay.

 

Mutual Evaluation Report of China - 2019, Executive Summary

 

More information:

The FATF Recommendations

FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems

Consolidated assessment ratings - an overview of ratings that assessed countries obtained for effectiveness and technical compliance.

 

 

 

Technical Compliance

Ratings which reflect the extent to which a country has implemented the technical requirements of the FATF Recommendations.

China - Mutual Evaluation 2019

R.1 - Assessing risk & applying risk-based approach
LC
R.2 - National cooperation and coordination
C
R.3 - Money laundering offence
PC
R.4 - Confiscation and provisional measures
C
R.5 - Terrorist financing offence
LC
R.6 - Targeted financial sanctions related to terrorism & terrorist financing
PC
R.7 - Targeted financial sanctions related to proliferation
NC
R.8 - Non-profit organisations
PC
R.9 - Financial institution secrecy laws
C
R.10 - Customer due diligence
LC
R.11 - Record keeping
C
R.12 - Politically exposed persons
PC
R.13 - Correspondent banking
LC
R.14 - Money or value transfer services
LC
R.15 - New technologies
PC
R.16 - Wire transfers
PC
R.17 - Reliance on third parties
LC
R.18 - Internal controls and foreign branches and subsidiaries
PC
R.19 - Higher-risk countries
C
R.20 - Reporting of suspicious transactions
LC
R.21 - Tipping-off and confidentiality
LC
R.22 - DNFBPs: Customer due diligence
PC
R.23 - DNFBPs: Other measures
PC
R.24 - Transparency and beneficial ownership of legal persons
LC
R.25 - Transparency and beneficial ownership of legal arrangements
PC
R.26 - Regulation and supervision of financial institutions
R.27 - Powers of supervisors
R.28 - Regulation and supervision of DNFBPs
R.29 - Financial intelligence units
R.30 - Responsibilities of law enforcement and investigative authorities
R.31 - Powers of law enforcement and investigative authorities
R.32 - Cash couriers
R.33 - Statistics
R.34 - Guidance and feedback
R.35- Sanctions
R.36 - International instruments
R.37 - Mutual legal assistance
R.38 - Mutual legal assistance: freezing and confiscation
R.39 - Extradition
R.40 - Other forms of international cooperation

C = compliant   |   LC = largely compliant     |   PC = partially compliant   |   NC = non-compliant

Effectiveness

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

China - Mutual Evaluation 2019

IO1
SE
IO2
ME
IO3
ME
IO4
LE
IO5
LE
IO6
ME
IO7
ME
IO8
SE
IO9
SE
IO10
LE
IO11
LE

HE = high level of effectiveness   |   SE = substantial level of effectiveness    |   ME = moderate level of effectiveness   |   LE = low level of effectiveness