Carrying out a risk‐based approach to AML in China: partial or full implementation?
| Published date | 12 October 2010 |
| DOI | https://doi.org/10.1108/13685201011083894 |
| Date | 12 October 2010 |
| Pages | 394-404 |
| Author | Lishan Ai,John Broome,Hao Yan |
| Subject Matter | Accounting & finance |
Carrying out a risk-based
approach to AML in China:
partial or full implementation?
Lishan Ai and John Broome
Faculty of Law, Centre for Transnational Crime Prevention,
University of Wollongong, Wollongong, Australia, and
Hao Yan
Wuhan Institute of Technology, Wuhan, People’s Republic of China
Abstract
Purpose – The purpose of this paper is to explain the rule-based and risk-based anti-money-
laundering (AML) approach, to demonstrate the implementation problems in carrying out a risk-based
approach (RBA) to AML and finally propose in what way the RBA should be conducted in China.
Design/methodology/approach – This paper analyzes the practice of money-laundering risk
managementin Chinese AML programs,compares the rule-basedAML approachand the risk-based AML
approach, and discusses the practicalcondition of carrying out the risk-basedAML approach in China.
Findings – Although China has made significant progress on combating money laundering, the
practice of money-laundering risk management in Chinese AML programs is still weak, and the
pre-conditions for fully implementing the RBA in China are yet to be met.
Originality/value – This paper highlights the practical issues preventing Chinese authorities from
fully implementing a risk-based AML approach, and proposes a “rule-based but risk-oriented” AML
approach (a partial RBA) in the context of Chinese realities.
Keywords Risk management,Money laundering, China
Paper type Viewpoint
1. Introduction
China officially launched its anti-money-laundering (AML) actions in 2002 and, since
then, Chinese AML have been enforced using a rule-based AML approach in every
regulated entity with insufficient consideration being given to money-laundering risk
management. Since 2008, China has been involved in the second stage of implementing
its AML strategic approach[1]. In fact, Chinese AML authorities published in Decem ber
2009 the Anti-money Laundering Strategic Development Guidelines (The People’s Bank
of China (PBC, 2009a))[2]. The guideline mandates a number of initiatives which
demonstrate that China will continue to enhance its AML mechanism, revising the
legislative system, and building the financial intelligence network to identify
suspicious transactions in the financial sector and designated non-financial businesses
(PBC, 2009a). In addition, China is fully preparing for the Fourth Round Mutual
Evaluation by Financial Action Task Force (FATF). According to the strategic
guidelines, by 2012, pertinent AML actions will be conducted on the basis of risk-rating
system, resources will be properly allocated, actions will be concentrated on the most
serious predicate crimes for money laundering, and a risk-based AML approach (RBA)
will be carried out in China. This paper analyzes the practice of money-laundering risk
management in Chinese AML programs, compares the rule- and the risk-based AML
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
13,4
394
Journal of Money Laundering Control
Vol. 13 No. 4, 2010
pp. 394-404
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201011083894
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