Efforts to combat money laundering
By Chuan Yu (China Daily)
Updated: 2004-08-10 08:32

From March, 2003 to the end of last year, the State Administration of Foreign Exchange (SAFE) ordered its regional branches to check the forex transactions authenticity of a total of 18,279 corporations and individuals, it said in a press release.

Thirty-six cases of illegal forex transactions were subsequently found, which involved US$20.5 million in forex funds, it said.

The SAFE transferred another 123 suspected money laundering cases, involving a total of US$414 million, to police, it said. Six of the cases, involving US$5.8 million, have been settled, while the rest are still under investigation.

"Since the SAFE started the verification work of large-sum and suspicious foreign exchange transactions in 2003, initial results have been achieved," the commission said.

According to a regulation announced by the People's Bank of China (PBOC), the central bank, at the beginning of last year, financial institutions are required to report forex cash transactions exceeding US$10,000, non-cash transactions exceeding US$100,000 with individuals, and non-cash transactions with corporations that top US$500,000.

The SAFE established a mechanism to verify the authenticity of those large-sum and suspicious transactions in March last year. It compiles lists of suspicious corporations and individuals after analyzing data provided by its regional branches, and then orders the verification of the transactions.

The commission said it handles cases where forex regulations are breached by itself, while all cases suspected of money laundering are transferred to the police.

Persons and corporations involved in both types of cases will be blacklisted, the commission said, while others checked will be put on either a "while list," when they are found innocent, or a list of "serious concern" where decisions are pending.

China staged a full-scale anti-money laundering campaign in late 2002. Money laundering is believed by many economists to have grown in recent years, largely because of an uptrend in activities that produce dirty money, including corruption, drug trafficking and smuggling.

The PBOC said early last month that lawmakers are drafting the nation's first Anti-Money Laundering Law with assistance from more than 10 government ministries.

The central bank said it was upgrading its anti-money laundering monitoring and analysis centre to enhance its supervisory capacity, and planned to inspect commercial banks' anti-money laundering mechanisms later in July.

The bank is also considering the possibility of requiring financial institutions other than banks, including securities firms and insurance companies, to report suspicious and large-sum transactions.

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