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As Ties to China Grow, So Do Compliance Concerns
By Colby Adams
printGrowing U.S. financial ties to the Chinese market will likely bring anti-money laundering compliance troubles along with profits, according to consultants and former government officials. "The number of American companies in China grows every year, and their operations are often more profitable in China than any other location in the world," said Nicholas Lardy of the Peterson Institute for International Economics, a Washington, D.C.-based policy group. The same can be said of U.S. and European financial institutions, including Citibank, Credit Suisse, Deutsche Bank, UBS AG and Goldman Sachs, which have all been licensed in recent years to operate in the...
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A U.S. official's threat last month of economic sanctions against four Chinese banks is likely to be toothless given economic and enforcement hurdles, say sanctions analysts.
A Swiss official warns that the United States plans legal action if a deal to hand over UBS account data is blocked, China announces that it has tweaked its counterterrorism laws and Ecuador says it will be off of FATF's blacklist by June, in this week's news roundup.
As an economic partner with the United States, few countries in the world compare with China. The same could be said for the quality of the nation's anti-money laundering regime, at least on paper, according to Peter Gallo, chief executive officer of Hong Kong-based consultancy Pacific Risk Ltd.
A U.S. federal district judge Wednesday sentenced two former Bank of China managers and their wives to prison for stealing and laundering more than $485 million.
New York state prosecutors charged a blacklisted Chinese metals dealer Tuesday with illegally circumventing U.S. economic sanctions through shell companies to utilize Manhattan banks.
Taiwanese police detained the country's former president Tuesday as part of an investigation into an alleged money laundering scheme, according to media reports.
China's central bank fined 12 Chinese financial institutions in the first six months of 2008 for involvement with money laundering, according to a news report.
The United States is likely to ramp up penalties against financial institutions and other companies that have bribed Chinese officials to gain entry into the Asian market, including business involving the Olympics, say consultants.
The U.S. Federal Reserve Board has cleared the opening of a New York branch of China's largest bank, a sign that U.S. regulators approve of the country's recent efforts to quash money laundering.
Macau is today not only one of the most active gambling centers in the world, but also one of the most vulnerable to money laundering, say compliance experts.
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China's central bank reported that suspected cases of money laundering rose to 387 billion yuan, or $52 billion, last year from 32.8 billion yuan in 2005, according to a Bloomberg News report.
In its 18th annual report, the organization that sets global anti-money laundering standards noted its accomplishments in the past year and identified new objectives.
Despite Chinas acceptance into FATF, money laundering and corruption in the country may get worse before they get better as root problems remain unaddressed, AML professionals say.
FATF approved Chinas membership during its plenary meeting in Paris this week. China passed comprehensive AML laws in October 2006 to bring its system in line with international standards.
The new law and corresponding regulations compel the nation's financial institutions to develop comprehensive anti-money laundering (AML) programs, with customer identification procedures, recordkeeping rules and suspicious and large transaction reporting requirements.