People’s Republic of China: Financial Sector Assessment Program-Technical Note on Anti-Money Laundering/Combating the Financing of Terrorism

According to the recent unpublished domestic national risk assessment (NRA),2 China faces relatively lower ML/TF threats from abroad with a higher risk of domestic criminal proceeds being transferred overseas. The update to the NRA concluded that the overall level of ML risk is medium and has remained the same (since 2017). Notably, there have been some changes in the major types of illicit proceeds-generating crimes, with tele and internet fraud becoming the most significant ML threat. The domestic understanding of risks including those related to corruption and domestic politically exposed persons (PEPs) may suffer from blind spots and could be further deepened. For example, given the dominant role of the state and state-owned-enterprises in the economy, more detailed analysis of corruption, as a predicate offence, would be worthwhile along with an assessment of the levels of politically exposed persons (PEPs) and the quality of related preventive measures (discussed further below). To improve the understanding of risk among government entities and the private sector responsible for reporting suspicious transactions, the publication of analysis from the NRA should be considered.