NCJ Number
197680
Journal
Journal of Contemporary Criminal Justice Volume: 18 Issue: 4 Dated: November 2002 Pages: 370-380
Date Published
November 2002
Length
11 pages
Annotation
After describing three main money laundering methods in China, this article identifies the reasons why these methods persist and discusses some of the major problems experienced by law enforcement authorities in attempting to address money laundering; how to improve countermeasures for money laundering is also considered.
Abstract
One money-laundering method in China involves companies in mainland China taking advantage of Hong Kong Special Administrative Region (HKSAR) branches or financial institutions to directly launder their "dirty" money; this is possible because of HKSAR's privileged circumstances under the policy of "One Country, Two Systems." A second money-laundering method consists of the use of underground banks established illegally inside China. The third money-laundering method involves new profiteers and launderers relationships for the purpose of laundering the wealth from public employees' corruption (e.g., bribes and embezzlement). Cases of money laundering that have used each of these three methods are presented in this article. All of the cases cited reveal some of the problems that must be addressed and resolved by those in Chinese financial management. The laws and regulations that govern money laundering are ineffective because they do not address the circumstances of crime in China. Although there are special articles in the Chinese Criminal Code regarding money laundering, they have a limited focus on people or organizations involved in smuggling, narcotics, or organized crime. China does not have the laws necessary to convict accessory criminals involved in money laundering. Macau's free port, offshore financial services, lack of foreign exchange controls, unaggregated law enforcement agencies, problematic law-and-order situations, and nascent anticorruption efforts all create an environment conducive to money laundering. China should establish a comprehensive anti-money-laundering system and strengthen enforcement of effective laws and regulations; and it should increase public awareness of the problem and its adverse impact on the national economy. The government should also provide the necessary legal regulatory tools to assist those authorities responsible for combating the problem. Developing a national anti-money-laundering program within the financial system is important. This should include a financial-transaction reporting system in which parties provide information on resources and the transactional process; required customer identification when opening an account or transferring capital; record-keeping standards and external auditing; and a means for verifying compliance. International cooperation is critical in the fight against money laundering. 20 references