China's central bank on Friday unveiled detailed measures to fight money laundering and the funding of terrorism in the Shanghai Free Trade Zone (FTZ).

Zhang Xin, director of the People's Bank of China (PBOC) Shanghai branch, believes that evaluating and controlling money-laundering risk is vital to stable and healthy development of the FTZ.

The central bank will improve internal controls and provide support for analysis of money flows in the zone. It will conduct due diligence of clients and transaction beneficiaries and step up supervision of free trade accounts. It will also strengthen anti-money-laundering procedures for all cross-border business.

On Friday, the bank set up an exchange and cooperation mechanism with the FTZ's management committee to ensure the financial reforms will be carried out. ' The central bank has rolled out numerous new policies in the past week, including allowing companies to borrow offshore yuan without restraints and the scrapping of interest rate ceilings on small foreign currency deposits.

Shanghai FTZ was launched last September as part of China's switch to an economic model driven more by value-added and consumption. It is a test bed for market reform. Regulators are extremely aware of risks arising from financial liberalization. The FTZ will develop institutional arrangements that can be cloned nationwide.

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