Opinions of the General Office of the State Council on Improving Anti-money Laundering, Anti-terrorist Financing and Anti-tax Evasion Regulatory Systems and Mechanisms (Guo Ban Circular [2017] No. 84)(Mainland China)

Joyce Wen

The General Office of the State Council promulgated the Opinions on Improving Anti-money Laundering, Anti-terrorist Financing and Anti-tax Evasion Regulatory Systems and Mechanisms the “Opinions”) on August 29, 2017. The Opinions indicate the importance of anti-money laundering, anti-terrorist financing and anti-tax evasion (the “Three Antis”) regulatory mechanisms and mention to gradually perfect by 2020 a clearly delineated authority scope, balanced responsibilities and effective cooperation “Three Antis” legal framework and system that is appropriate for a socialist market economy, the circumstances in China, and also comply with international standards in order to establish achieve the objectives of effectively preventing money laundering, terrorist financing and tax evasion.  A total of more than twenty measures are put forth to with respect to six aspects, namely, improvement of work mechanisms, improvement of the legal system, sound preventive measures, severe punishment of illegal criminal activities, deepened international cooperation and the creation of a good social atmosphere.  Please see the details below:

  1. Improved work mechanisms

According to the Opinions, it is necessary to create a comprehensive set of sound mechanisms through the use of better overall coordination, research and design of a money-laundering and terrorist-financing risk assessment system, greater sharing of leads and assistance to case investigation, enhancing regulatory coordination, and the use of government data and optimization of the deployment of regulatory resources.

  1. Improved legal system

With respect to the system, the Opinions state that it is necessary to research and perfect the relevant criminal legislation, amend the relevant provisions on penalizing money laundering and terrorist financing, clarify the procedure for carrying out relevant anti-terrorism resolutions adopted by the United Nations Security Council, enhance the risk monitoring of specific non-financial institutions, explore the establishment of an anti-money laundering and anti-terrorist financing regulatory system for non-financial institutions, enhance the compatibility of regulatory measures, and improve risk prevention and control systems.

  1. Improved preventive measures

From the perspective of prevention, the Opinions mention that it is necessary to establish robust regulatory mechanisms based on risk prevention and control so as to provide guidance to anti-money laundering bodies to effectively eliminate risks, enhance regulatory measures on legal persons and improve the efficiency of such regulatory work, improve the monitoring and analysis system and raise the their performance level, balance the encouragement of innovation with adherence to bottom line principles in order to properly cope with emerging risks associated with new businesses and new business types, improve the monitoring mechanisms for irregular cross-border funds and combat cross-border financial criminal activities, and establish sound educational and training mechanisms to foster teams of professionals.

  1. Severe punishment of illegal criminal activities

With respect to illegal criminal activities, the Opinions state that it is there must be an effective consolidation of audit resources and strongly go after tax-related offenses, and create cooperation mechanisms for combating customs tariff-related violations and criminal activities. In addition, anti-money laundering investigations will intensify along with the establishment of sound mechanisms for analysis of money laundering types.

  1. Deeper international cooperation

From the perspective of international cooperation, the Opinions state the need to perform proper cross-assessment between anti-money laundering and anti-terrorism financing, create a good international image and deepen international cooperation in combating money laundering and tax evasion.

  1. Creation of a good social atmosphere

With respect to the social atmosphere, the Opinions highlight the need to enhance self-regulation, fully take advantage of the active effects of self-regulatory organizations, continue promotional education efforts and raise the public’s awareness in participation and collaboration.

The Opinions are the most comprehensive top-level design in China’s anti-money laundering regime since the promulgation of the Anti-money Laundering Law ten years ago, and they also represent China’s general plan for greater reforms in the anti-money laundering, anti-terrorist financing and anti-tax evasion fields. The Opinions have great significance in terms of guidance for subsequent performance in anti-money laundering, anti-terrorist financing and anti-tax evasion works, the prevention and suppression of criminal activities, the effective prevention and control of financial risks, and the protection of the rights and interests of the people.  Meanwhile, the Opinions may also have certain impact on the business models of transnational enterprises.