China: Law on financial crimes broadened

CHINA'S top legislature yesterday expanded the scope of an anti-money laundering law to include accepting bribes. The definition of money laundering also has expanded to include corruption, violating financial management regulations and financial fraud. The law is expected to come into effect on January 1.

Previously, the law only identified drug trafficking, organized crime, terrorist crimes and smuggling as money laundering crimes. China's officials and analysts believed the coverage was too narrow. They called for stepping up efforts to combat money laundering, which has risen in recent years along with activities such as embezzlement, drug trafficking and other smuggling. The law demands financial and some non-financial institutions to maintain record on clients and transaction records and to report large and suspect transactions.

The People's Bank of China is the nerve center of the anti-money laundering campaign. Its provincial branch offices are authorized to investigate suspect fund transfers of financial institutions. The law demands financial and certain non-financial institutions to keep identity information of clients and transaction records, report large and suspect transactions. The law offers a legal basis for checking the flow of cash of corrupt officials, said Lang Sheng, an official on criminal law with the Standing Committee of the National People's Congress.

The People's Bank of China, or central bank, is the nerve center of the anti-money laundering campaign. Its offices are empowered to monitor and investigate suspect money flows and mete out administrative punishment to employees for allowing the illegal transfer of money. The move is designed to widen the legal net to combat money laundering.

The China Anti-Money Laundering Monitoring and Analysis Center, an office under the central bank set up in 2004, says 683 suspicious money laundering cases had been reported to the police by the end of 2005. They involved 137.8 billion yuan (US$17.2 billion) and over US$1 billion.

The law does not detail the legal power of the center, but allows it to gather "necessary information from departments and institutions under the State Council." The law is also expected to help facilitate China's application to the Financial Action Task Force - a Paris-based inter-governmental body that promotes policies to combat money laundering.

Xinhua 01-11-06