Today FCN is publishing the China Financial Crime Country Dashboard.
The main proceeds-generating predicate crimes in China are illegal fundraising, fraud, trafficking in illicit drugs, corruption and bribery, tax crimes, counterfeiting of products, and illegal gambling. China also faces a serious threat from terrorism.
Sector Vulnerabilities & Risks:
Banks (based on the nature of their products/services and volume of activity), no effective arrangements in place for registering and retaining beneficial ownership (BO) information, the lack of coverage of designated non-financial businesses and professions (DNFBPs) by the AML/CFT framework is a significant vulnerability, large underground financial sector with broad international connections, a rapid growth in the use of Fintech products, particularly in the non-bank payment sector
The main sector residual risks are: High – Banks, Internet Finance Sector, Dealers in Precious Metals, Online Lending institutions, Payment Institutions & Small and medium sized urban, rural, credit banks and cooperatives. Medium High – Terrorist Financing. Medium – Life Insurance, Real Estate. Not Rated in MER but included: Fintech Sector and Underground Banking (as per FATF MER 2019).
China remains in enhanced follow up but has made progress in addressing some of its technical compliance deficiencies from the 2019 FATF MER and Follow Up Reports in 2020, 2021 & 2022. China is compliant 9/40 Recommendations, Largely Compliant in 22/40 Recommendations, Partially Compliant in 5/40 Recommendations and Non Compliant in 4 Recommendations.
Recommendations for Partially Compliant Ratings are R6 (Targeted Financial Sanctions related to Terrorism/Terrorism Finance), R7 (Targeted Financial Sanctions related to Proliferation), R12 (Politically Exposed Persons), R24 (Transparency & BO of Legal Persons), & R 35 (Sanctions) & Non Compliant for R22 (DNFBP CDD), R 23 (DNFBP Other Measures), R25 (Transparency of BO of Legal Arrangements) & R28 (Regulation & Supervision of DNFBP).
On Effectiveness, China received 0/11 Highly Effective Ratings, 3/11 Substantially Effective Ratings & 4/11 Moderately Effective Ratings & 4/11 Low Effective Ratings. The ME ratings were for IO2 (International Co Operation),IO3 (Supervision), IO6 (Financial Intelligence), IO7 (ML Investigations & Prosecutions and Sanctions). The LE ratings were for IO4 (Preventative Measures), IO5 Legal Persons & Arrangements), IO10 (TF Prevention including NPOs) & IO11 (WMD Proliferation Prevention).
Key Outcomes Performance Data for China:
FIU Staffing: NA
SARs Reported: 5.4M
SAR Conversion Rate: NA
NRA: Yes latest AML in 2018 but not publicly available
ML Convictions: 82 in 2017 (note taken the smaller number available for true ML convictions)
Human Trafficking Convictions: 2,355 in 2019
Foreign Bribery Convictions: 0 between 2018-2021
Assets Seized: NA
Assets Confiscated: US$5-1B (1.1% of estimated financial crime proceeds @ 3.6% of GDP) in 2017.