VII-3 Question: Money laundering is a serious crime in the financial field. At present, how many types of money laundering crimes occur in China? In terms of preventing and combating money laundering, what has China done so far?
A: Since the 1990s, the Chinese customs, judicial and financial departments have made achievements in terms of combating money laundering in the fields of drug dealing, smuggling, corruption and organized crime, as well as money laundering through terrorist financial networks. However, at the present time, money-laundering activities have taken on new forms, such as manipulating the legitimate financial system, through underground banks, the Internet, through imports and exports as well as cash smuggling and investment. These serious money-laundering activities disturb the national financial and social management order.
In order to effectively prevent and combat money laundering, safeguard the national economic and financial safety and maintain economic order, China set up a joint conference on anti-money laundering in 2003, which involves 23 government departments. Through rapid legislation, China has established a comprehensive anti-money laundering legal system including laws, administrative regulations and department rules. In October 2006 in particular, China passed the Law on Anti-Money Laundering, which clearly defines anti-money laundering mechanisms and the anti-money laundering responsibilities of financial institutions. The implementation of this law will be conducive to finding and cutting the capital supply and channels of money laundering. It will also help investigate and confiscate proceeds of crime and monitor money laundering on the upstream of the crime. Those measures protect the property rights of the victims of upstream crimes, safeguard sanctity of the law, participate more in the international joint efforts in anti-money laundering, and maintain China's image.
In addition, China has made it compulsory that financial institutions set up account identification systems and retain account profiles and transaction records, report large transactions and suspicious transactions, so as to fully honor the responsibility of anti-money laundering. As for those failing this and leading to money laundering, they will be subject to financial punishment of up to 5 million yuan and their operational licenses will likely be revoked. These measures have effectively prevented and combated money laundering. Chinese domestic money laundering activities are intertwined with international smuggling and drug dealing crimes involving huge amounts of money that moves internationally. It is obvious that one nation's strength is far from enough to combat money laundering. In order to seek international cooperation, China has launched multi-faceted communication and cooperation with international organizations, other nations and regions in the field of anti-money laundering legislation, law enforcement, justice, money investigation, and information sharing and training. In October 2004, China, together with Russia, Kazakstan, Tajikistan, Kyrgyzstan, and Belarus, jointly set up a Europe-Asia group against money laundering and terrorism financing (EAG). In January, China was officially accepted as an observer of the influential Financial Action Task Force on Money Laundering (FATF). According to schedule, China is expected to become a formal member of FATF later in 2007.