Adopting anti-money laundering law in China
On October 31, 2006, China adopted an anti-money laundering law to broaden the definition of money-laundering crimes – not they include bribe-taking.
Before this, the anti-money laundering law defined drug trafficking, organized crime, terrorist crimes and smuggling as money laundering crimes, while corruprtion and bribe-taking, violating financial management regulations and financial fraud were not identified as money laundering.
Drafting the anti-money laundering law began in 2004.
The new law is to come into effect on January 1, 2007. In accordance with it, financial and some non-financial institutions will be required to maintain records on clients and transaction records and to report large and suspicious transactions. The People’s Bank of China, or central bank, is the centre of the anti-money laundering campaign; its branches are empowered to investigate suspicious fund transfers of financial institutions. The new law will provide a legal basis for checking the flow of cash of corrupt officials.
Also, the law is expected to help facilitate China’s application to the Financial Action Task Force discussed previously. China became FATF observer in 2005. The law also plans to exchange information with overseas anti-money laundering organizations in order to combat global money laundering.