Landmark legislation on anti-money laundering and death sentences was approved by China's top legislature Tuesday and is scheduled to take effect on January 1.

The Standing Committee of the National People's Congress widened the definition of money laundering to include corruption and bribe taking, violating financial management regulations and financial fraud.

Previously, the law identified only drug trafficking, organized or terrorist crime and smuggling as money laundering.

Officials and analysts believed the ambit was too narrow and called for stepped-up efforts to combat money laundering and stop corrupt officials fleeing abroad with large amounts of illicit money.

The law demands that financial and some non-financia l institutions maintain customer and transaction records and report large and suspect transactions.

The People's Bank of China, the central bank, and its provincial branch offices are authorized to investigate suspect fund transfers.

According to the China Anti-Money Laundering Monitoring and Analysis Centre, an office under the central bank set up in 2004, 683 suspected money laundering cases had been reported to the police by the end of 2005. They involved 137.8 billion yuan (US$17.2 billion) and US$1 billion.

The law, made as required by the United Nations Convention Against Corruption, also pledges to step up co-ordination with other countries to combat global money laundering and exchange information with overseas anti-money laundering organizations.

"It is an important and essential step," said Zhang Xuechun, an economist with the Asian Development Bank's Resident Mission in China.

"But how well it will be implemented depends on whether the government can put together an efficient inter-department co-ordination mechanism," he said.

Zhang Hongwei, director of the anti-money laundering department of the Ministry of Public Security, said the law would facilitate closer co-operation between police departments and financial institutions.

The central bank last year transferred 2,790 suspected cases involving 32.78 billion yuan (US$4.1 billion) to the police, and the State Administration of Foreign Exchange also referred 405 cases involving US$1.24 billion, according to a central bank report released in August.

Meanwhile, an amendment to the Organic Law of the People's Courts was adopted, requiring all death sentences to be reviewed and ratified by the Supreme People's Court.

Xiao Yang, president of the court, said the there would now be a clear distinction between the review of a death sentence and an appeal of the verdict. The former will be handled by the highest court while the latter remains with provincial courts.

"It will give the defendants one more chance to have their opinions heard," Xiao said.

Chen Zhonglin, a law professor with Southwest University of Political Science and Law, estimated that the number of death sentences in China would drop by at least 20 per cent after the amendment of the law.

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