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Regulators on the Tail of Money Launderers
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The authorities last year cracked down on more than 50 money laundering cases involving more than 10 billion yuan (US$1.25 billion), the central bank said yesterday in a report.

The release of the report coincides with the second reading of the draft anti-money laundering law by the Standing Committee of the National People's Congress (NPC).

The law, the first of its kind in the country, is expected to plug the legal loopholes in relation to money laundering with clearer definitions of such activities and penalties.

It will also help build an efficient regulatory structure to detect, monitor and prevent money laundering, experts said.

The number of cases solved last year was the same as in 2004, but the amount involved was much higher; about two-and-a-half times the 4 billion yuan (US$500 million) then.

Most of last year's cases were major crimes, according to the report, which added that they were mainly concentrated in coastal areas and provinces in the northeast and southwest, such as Yunnan, Shandong, Guangdong, Shanghai, Zhejiang and Heilongjiang.

The People's Bank of China (PBC) also transferred 2,790 suspected cases involving 32.78 billion yuan (US$4.1 billion) to the police last year; as did the State Administration of Foreign Exchange, which referred 405 cases involving US$1.24 billion.

The central bank report, released for the second year running, also highlights some challenges that the country faces, and cites specific cases to illustrate the channels, impact and trend of such illegal practices.

A major channel is transactions through illegal money exchange vendors or underground banks, or qianzhuang as they are called in Chinese.

Financial regulators joined hands with police to crack down on 47 illegal money changers and lenders last year and arrested 165 suspects. Cash amounts involved were up to 10 billion yuan (US$1.25 billion).

As for the draft anti-money laundering law, a source close to the matter said if there are no major objections during the current debate, it is possible that the draft will be sent for a third reading this year before it is approved.

Xiang Junbo, vice-governor of the PBC and head of its Shanghai headquarters, said that in addition to the law, three anti-money laundering regulations targeting the banking, securities and futures, and insurance sectors will be released in the second half of the year, thereby expanding the fight to the latter two sectors.

Most of the information on suspected "dirty money" is first submitted to the Anti-money Laundering Monitoring and Analysis Center of the PBC. Apart from regular reports from commercial banks, rural credit cooperatives and other banking institutions, the public is also encouraged to report suspicious activities to the center.

Last year, the center received 283,400 reports of suspicious renminbi funds and about two million involving suspicious foreign exchange transactions.

Money laundering is already an offence under China's criminal law.

The State Council, China's cabinet, has also issued regulations governing cash management, penalties for financial irregularities and illegal financial organizations.

It is mandatory for individuals to use their real names to open deposit accounts.

Apart from underground banking and illegal foreign exchange bureaux, money laundering cases mainly involve the embezzlement of public funds, drug smuggling, and illegal lotteries.

(China Daily August 25, 2006)

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