Banks face a risk from money laundering in China because of large flows of illicit money, weak controls and the difficulties of screening names, said a new report from research and consulting firm Celent.
The report was commissioned by Dow Jones Risk & Compliance, which, like this blog, is owned by Dow Jones & Co., a News Corp company.
Money laundering is “a big issue” in southern China, Celent said, because of the informal nature of capital flows there. “Money changers, institutions and individuals who act as remittance agencies enable money transfers between counterparties in China and Hong Kong, often in violation of foreign exchange regulations,” it said.
With increased international exposure to the yuan as its use grows in commerce and finance, the report urged regulators and financial institutions, “to step up efforts to curb money laundering activities.”
China’s government has taken money laundering more seriously since 2006-2007, according to the report, with new regulations introduced, but fines on institutions for non-compliance have been “insignificant.”
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Link to the Celent report (member only access):Chinese Payments and Sanctions Compliance