Front Matter Page

MF Country Report No. 19/172

PEOPLES REPUBLIC OF CHINA

DETAILED ASSESSMENT REPORT ON ANTI-MONEY LAUNDERING AND COMBATING THE FINANCING OF TERRORISM

June 2019

This paper for People’s Republic of China was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed in July 2018.

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© 2019 International Monetary Fund

Front Matter Page

PEOPLE’S REPUBLIC OF CHINA

DETAILED ASSESSMENT REPORT ON ANTI-MONEY LAUNDERING AND COMBATING THE FINANCING OF

TERRORISM

June 2019

Prepared By

Legal Department

Contents

• Glossary

• EXECUTIVE SUMMARY

• KEY FINDINGS

• DETAILED ASSESSMENT REPORT

• ML/TF RISKS AND CONTEXT

• A. ML/TF Risks and Scoping of Higher-Risk Issues

• NATIONAL AML/CFT POLICIES AND COORDINATION

• A. Key Findings

• B. Recommended Actions

• C. Immediate Outcome 1 (Risk, Policy and Coordination)

• LEGAL SYSTEM AND OPERATIONAL ISSUES

• A. Key Findings

• B. Recommended Actions

• C. Immediate Outcome 6 (Financial Intelligence ML/TF)

• D. Immediate Outcome 7 (ML Investigation and Prosecution)

• E. Immediate Outcome 8 (Confiscation)

• TERRORIST FINANCING AND FINANCING OF PROLIFERATION

• A. Key Findings

• B. Recommended Actions

• C. Immediate Outcome 9 (TF Investigation and Prosecution)

• D. Immediate Outcome 10 (TF Preventive Measures and Financial Sanctions)

• E. Immediate Outcome 11 (PF Financial Sanctions)

• PREVENTIVE MEASURES

• A. Key Findings

• B. Recommended Actions

• C. Immediate Outcome 4 (Preventive Measures)

• SUPERVISION

• A. Key Findings

• B. Recommended Actions

• C. Immediate Outcome 3 (Supervision)

• LEGAL PERSONS AND ARRANGEMENTS

• A. Key Findings

• B. Recommended Actions

• C. Immediate Outcome 5 (Legal Persons and Arrangements)

• INTERNATIONAL COOPERATION

• A. Key Findings

• B. Recommended Actions

• C. Immediate Outcome 2 (International Cooperation)

• BOXES

• 1. Example of Law Enforcement Use of Financial Intelligence for a Predicate and an ML Investigation

• 2. Use of Financial Intelligence in a Predicate Offense Investigation

• 3. Example of a Successful CFT Case Initiated by the FIU Based on an STR by an FI

• 4. Examples of a Narcotics and ML Cases Using Article 191

• 5. Examples of Corruption and ML Cases Using Article 191

• 6. Examples of Illegal Fund Raising and ML Cases (Article 191)

• 7. Case Example of Operation Foxhunt

• 8. France-China Criminal Legal Assistance Agreement

• 9. KU—Terrorist Financing Through the Provision of Mobile Phones and Cash

• 10. YA—Terrorist Financing Through the Operation of an Underground Bank

• 11. Extradition of a Suspect Y to Japan

• 12. Special Operation to Combat Cross-Border ML Crimes

• 13. Case Involving Both the FIU and Law Enforcement Cooperation

• FIGURES

• 1. System of Government

• 2. TF Case 1

• 3. TF Case 2

• 4. Process of Reporting of Suspicious Transactions in China

• TABLES

• 1. Overview of the Financial Sector (as of December 31, 2017)

• 2. Statistics of Online Lending Institutions (P2P and Internet Lending Companies)

• 3. FIU Disseminations

• 4. Convictions Entered Pursuant to the Three ML Articles

• 5. Instrument Confiscations (2013-2017)

• 6. Criminally Derived Property Confiscated (2013-2017)

• 7. Property Confiscated to Satisfy Equivalent Value (2013-2017)

• 8. Convictions Entered Against Article 395

• 9. Customs Cross-Border Currency Cases (2013-2017)

• 10. Number of Cases and Convicted Persons Involved in TF (2012-2016)

• 11. Internal CTF Training Provided by the PBC

• 12. Penalties for Crime of Providing Assistance in Terrorist Activities

• 13. Approved Arrests and Prosecutions Initiated against the Financing (Assisting) of Terrorist Activities

• 14. Rejection of Relationships by Three Commercial Banks When Identifying Use of False IDs to Open Account (Unit: Persons or Times)

• 15. Number of STRs Submitted by FIs (2012-2016) (in thousands)

• 16. Key STRs by FIs (2012-2016)

• 17. Number of Institutions by Category that Reported STRs (2015-2017)

• 18. Key STRs on TF from 2015 to Mid-2018

• 19. AML/CFT Training for 24 Institutions Directly Supervised by the PBC

• 20. Applications for FIs and DNFBPs, and Senior Management Appointments (2015-2018)

• 21. Number of Applicants in Banking Institutions

• 22. Types of PIs Licensed as of the End of 2017

• 23. Number of Institutions with Ratings Categorized by the PBC (2015-2017)

• 24. Statistics of Various Supervision Measures Conducted at FIs by the PBC in 2015-2017 (Number of Institutions)

• 25. Numbers of FIs and Individuals Penalized Financially

• 26. Weaknesses Identified by PBC in PI Sector

• 27. MLA Requests Received by the MOJ of China

• 28. MLA Requests Received by Authorities of China

• 29. Types of Information Requested by Countries through the MFA

• 30. Foreign Extradition Requests Received

• 31. MLA Requests Sent by the MOJ of China Abroad

• 32. MLA Requests Sent by the MFA of China Abroad

• 33. Offenses for Which China Requested Extradition (2012 to the First Half of 2018)

• 34. Requests Sent Abroad by CAMLMAC

• 35. Number of Requests by CAMLMAC to Foreign FIUs by Jurisdiction

• 36. Requests Sent by China via Police Cooperation

• 37. CSRC Requesting Regulatory Information

• 38. Number of Financial Intelligence Requests Received by CAMLMAC

• 39. Financial Intelligence Provided by CAMLMAC to Other Jurisdictions (Top 10 Countries)

• 40. Requests Received by China via Police Cooperation

• 41. Requests Received on Tax-Related Information

• 42. CSRC Providing Regulatory Information

• ANNEXES

• Technical Compliance Annex

• Summary of Technical Compliance—Key Deficiencies

Glossary