China strengthens efforts to clean up 'dirty money'

Updated: 2016-08-17 07:36

By Wang Yanfei(China Daily)

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"Without financial clues, it would take a long time to identify the major suspects in drug trafficking rings, but following the trail of money transfers helps us trace the paths along which drugs are carried," said Li Guohong, deputy head of the police station in Panzhihua.

Using the anti-money laundering system to track flows of funds, financial institutions tipped off investigators about 866 cases of suspected illegal activity in 2014, a year-on-year rise of more than 82 percent. They also provided assistance that led to 925 cases being cracked, nearly 50 percent higher than the previous year, according to the PBOC's annual anti-money laundering report, published in December.

Despite the improvements in hardware systems, experts say China desperately needs to further improve supervision of commercial banks, some of which fail to report potentially illegal activity, even after suspicions are raised.

Yan Lixin, a professor at the China Center for Anti-Money Laundering Studies at Fudan University in Shanghai, said the supervisors need to help banks strike a better balance between making profits and helping to crack down on financial criminals.

In May, the China Banking Regulatory Commission issued a guideline that requires banks to forcefully adopt the Know Your Customer Norm directive, under which banks must conduct rigorous checks into clients' backgrounds and financial status when they open accounts, and report suspect transactions to the authorities without delay.

Yan Lixin said China should improve communications with other countries because the rules that regulate money laundering vary from country to country.

Rick McDonell, former executive secretary at the Financial Action Task Force, said China's involvement in international anti-money laundering efforts has been crucial, and he called on the country to play a leading role in the fight.

"FAFT and other anti-money laundering standards really wouldn't have been implemented without China's participation," he said.

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