The role of commercial banks in combating money laundering
| Date | 11 October 2011 |
| Published date | 11 October 2011 |
| DOI | https://doi.org/10.1108/13685201111173802 |
| Pages | 324-333 |
| Author | Musonda Simwayi,Wang Guohua |
| Subject Matter | Accounting & finance |
The role of commercial banks
in combating money laundering
Musonda Simwayi and Wang Guohua
School of Public Administration,
Huazhong University of Science and Technology,
Wuhan City, People’s Republic of China
Abstract
Purpose – The purpose of this paper is to assess the role of commercial banks in combating money
laundering in the People’s Republic of China (PRC). An effective anti-money laundering (AML) regime
within the banking sector can make a significant contribution to the fight against money laundering
both nationally and internationally.
Design/methodology/approach – An assessment based on the AML law of China, rules and
regulations issued by the People’s Bank of China (PBOC) was conducted on commercial banks in
Xichang City. A questionnaire and guided oral interviews were employed to collect data for the study.
Findings – The study found that all the five banks that responded to the questionnaire have, for the
period 2006-2010, not been assessed by the PBOC, despite being independently audited by external
auditors. All banks have AML policies and procedures in place, have designated a compliance officer
for AML activities and trained their employees.
Research limitations/implications – Only five banks responded to the questionnaire as most of
them were not willing to release information on their AML activities, for various reasons. This raises
the question of generalizing the findings of the current study.
Originality/value – The paper shows the extent to which AML rules and regulations have been
embraced and implemented by commercial banks at a micro level. It is envisaged that the findings of
this study will encourage similar studies in other cities of the PRC and help policy makers, especially
at the PBOC, to re-align their strategies in line with what is obtaining on the ground.
Keywords People’s Republicof China, Commercial banks, Money launderingcontrol,
Money launderingregulations, Xichang City
Paper type Research paper
1. Introduction
In the recent past, China has made tremendous progress in the fight against
money laundering. This is despite the short history in combating money laundering and
insufficiency working experience and the experienced professionals in comparison with
other countries such as the UK, Australia and Germany. The progress in China has largely
been on account of two things. First, China’s red hot economy has opened to both lawful
commercial activities and transnational crimes especially money laundering. Second, China
has been striving to bring her legal and regulatory environment to international standards.
The People’s Bank of China (PBOC) as a Central Bank takes charge of the anti-money
laundering (AML) supervision and administration in the country. In January 2003, the
PBOC promulgated three rules aimed at enhancing the fight against money laundering.
These are:
(1) Rules for AML by financial institutions (FIAML).
(2) Administration rules for the reporting of large-value and suspicious Renminbi
(RMB) payment transactions.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
14,4
324
Journal of Money Laundering Control
Vol. 14 No. 4, 2011
pp. 324-333
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201111173802
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