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Money laundering

(chinadaily.com.cn)
Updated: 2006-11-16 13:52

Money laundering, the metaphorical "cleaning of money" with regard to appearances in law, is the practice of engaging in specific financial transactions in order to conceal the identity, source and/or destination of money and is a main operation of underground economy.

The prime method of fighting money laundering (a process usually termed "AML" or anti-money laundering) is the requirement on financial intermediaries to know their customers - usually termed KYC (know your customer) requirements. With a good knowledge of their customers, financial intermediaries will often be able to identify unusual or suspicious behavior, including false identities, unusual transactions, changing behaviour or other indicators that laundering may be occurring.

In China, the Standing Committee of the National People's Congress widened the definition of money laundering in November 2006 to include corruption and bribe taking, violating financial management regulations and financial fraud. Previously, the law identified only drug trafficking, organized or terrorist crime and smuggling as money laundering.

According to the China Anti-Money Laundering Monitoring and Analysis Centre, an office under the central bank set up in 2004, 683 suspected money laundering cases had been reported to the police by the end of 2005. They involved 137.8 billion yuan (US$17.2 billion) and US$1 billion.