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Title: Developing an anti-money laundering regime and implementing anti-money laundering preventive measures in China : from the perspective of financial institutions
Other Titles: Cong jin rong ji gou shi jiao kan Zhongguo fan xi qian zhi du de fa zhan ji fan xi qian yu fang xing cuo shi de shi shi
Authors: Wong, Yuet Alex (黄越)
Department: School of Law
Degree: Doctor of Juridical Science
Issue Date: 2010
Publisher: City University of Hong Kong
Subjects: Money laundering -- Law and legislation -- China.
Money laundering -- China -- Prevention.
Notes: CityU Call Number: KNQ966 .W66 2010
xiii, 308 leaves 30 cm.
Thesis (JSD)--City University of Hong Kong, 2010.
Includes bibliographical references (leaves 279-299)
Type: thesis
Abstract: After China adopted its open-door policy in 1978, money laundering problems began to appear and soon proliferated. China first started its campaign against money laundering in 1989. Despite significant improvement in China's fight against money laundering over the last 20 years, research of this thesis indicated that China's AML regime was still inadequate when compared to international anti-money laundering (AML) standards. Also, financial institutions (FIs) in China currently encountered significant practical difficulties in implementing risk-based AML preventive measures in their daily operations. This research aimed, first, to investigate the areas of improvement that could be made, from the perspective of FIs, to China's AML regime so as to enhance its effectiveness, and second, to explore possible ways to enhance the implementation of existing risk-based AML preventive measures by FIs in China. With respect to the first part of the research, findings indicated that China's primary money laundering offence could be improved by extending the scope, applicability, predicate offences, mental and physical requirements, etc. Also, auxiliary money laundering offences, such as reporting and tipping-off offences, should be introduced into China's criminal law. Regarding current administrative and regulatory AML preventive measures imposed on FIs in China, this thesis called for more risk-based elements to be included, such as those related to customer due diligence and customer transaction monitoring. The research also indicated that China had yet to reach a stage at which it was able to adopt a full-blown risk-based approach to AML compliance. This thesis suggested that the proper approach to AML compliance in China was a mixed approach in which the rule- and risk-based AML preventive measures co-existed to retain the benefits of simplicity and certainty, enhancing the effectiveness of AML compliance. Regarding the second part of the research, in response to the practical difficulties currently encountered by FIs in China when implementing risk-based AML preventive measures, this thesis suggested a practical proposal to overcome such difficulties. The proposal included the following elements: practical and functional ways to identify AML risk factors and ultimate beneficial owners; ways to assess customers' money laundering risks and categorize them into different risk levels; ways to mitigate and manage customers' different money laundering risks; ways to conduct customer transaction monitoring; and ways to test internal compliance with AML programs. Due to the vast volume of transactions conducted each day by FIs, this thesis highlighted the importance of automation of transaction monitoring and suggested essential components that should be included in an effective automated transaction-monitoring model. As only minimal research on the above research areas existed, the author believed that the findings of this research present very practical applications that could contribute positively to the development of a more effective AML regime and to the implementation of AML preventive measures by FIs in China.
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