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Anti-money laundering

(China Daily)
Updated: 2006-04-27 06:15

The draft law on anti-money laundering submitted to the top legislature on Tuesday expanded the scope of tracing suspicious money flowing from the banking sector to other commercial businesses.

Meanwhile, it will place those holding public office under surveillance.

These measures have generally been touted as two crucial new steps in China's anti-money laundering legislation.

Admittedly as the scope of supervision widens, the authorities are tightening the reins to control the rising crime of money laundering, which is conducted under various disguises.

The anti-money laundering monitoring centre of the People's Bank of China reported 683 suspected money-laundering cases to police in the past two years, involving a total of US$17 billion. Experts estimate that the real amount of tainted money could be US$50 billion.

With the rising number of embezzlement- and bribery-related money laundering crimes by government officials in recent years, the draft law rightly strengthens control of possible crime by government officials.

What the new law needs to tackle, however, goes far beyond that.

A serious challenge facing legislators is how to define the predicate offences of money laundering.

A wider definition of the predicate offences, which serve as a source of money laundering, will toughen law enforcement.

Traditionally, Criminal Law stipulated that the predicate offences for money laundering include drug trafficking, organized crime, smuggling and terrorist activities.

Internationally, the general scope of predicate offences for money laundering is much wider. It means that although money-laundering criminals of other sources can be held accountable domestically on other charges, it would be hard to seek international co-operation in seizing them once they fled overseas.

It is good to see that the new draft law gives a wider berth to the predicate offences for the crimes of money laundering, incorporating embezzlement, bribery and financial swindle.

The current controversy lies in whether China should further expand that scope to better dovetail with international practice, such as the 40+9 Recommendations proposed by the Financial Action Task Force on Anti-Money Laundering, an inter-governmental body combating international illegal money flow. It suggests at least 20 predicate offences for money laundering.

From an international perspective, given the rising crime on its soil and its necessity to gain full access to international co-operation against money laundering, it is better for China to get bolder in defining the crime.

(China Daily 04/27/2006 page4)