Doctor of Philosophy
Ai, Lishan, Anti-money laundering (AML) regulation and implementation in Chinese financial sectors: money-laundering vulnerabilities and the 'rule-based but risk-oriented' AML approach, Doctor of Philosophy thesis, , University of Wollongong, 2012. https://ro.uow.edu.au/theses/3641
Since China formally launched its anti-money laundering (AML) campaign in the early 2000s, additional challenges and higher standards are faced by both Chinese AML regulators and regulated entities, and the national scope of combating money laundering (ML) has been expanded. With banks, securities, and insurance industries being the main battlefield, research on AML implementation in Chinese financial sectors is extremely significant since AML experience from the financial sectors will be a useful and important reference for non-financial industries. The first part of this thesis critically examined the soundness and effectiveness of AML regulation and compliance in China, and the factors which have increased AML effectiveness in Chinese financial institutions. The second part explored possible ways to enhance existing AML implementation in Chinese financial sectors.
The thesis examined the most serious issues related to ML with clearly Chinese characteristics, namely, the underground or informal banking system, corruption-related ML, international 'hot' money and private loans, and suggests ways to optimise efforts in Chinese financial sectors to address these problems. The thesis indicates that there are significant gaps in the understanding and analysis of the hidden reasons for ineffective compliance with AML program in Chinese financial sectors, including economic, political, legal, and cultural reasons. The thesis also examines the problems that are encountered in existing AML implementation in Chinese financial sectors.
In addition, this thesis analysed the ML risks and vulnerabilities in Chinese banking, securities, and insurance sectors, and emphasises the synergistic relationship between ML risk-rating systems and enterprise-wide AML information programs to help determine and analyse the ML vulnerability of the Chinese financial sectors. The thesis concludes that there are significant gaps in the understanding and analysis of ML risk management in Chinese financial institutions.
The third aim of this thesis was to compare the traditional rule-based AML approach and the latest risk-based AML approach, to determine the most appropriate way to translate the risk-based AML approach into the Chinese reality. Findings indicate that China has yet to reach a stage at which it is able to adopt a full risk-based approach (RBA) to AML compliance. This thesis designed a strategy map of a 'rule-based but risk-oriented' AML approach (or partial RBA) applicable to Chinese financial sectors given their current stage of development. It suggests that only the adoption of this approach can provide an effective transition towards future implementation of a full RBA in China.
The author believes that the findings of this thesis present very practical applications that could contribute positively to the development of a more effective AML regime and to the implementation of AML preventive measures in Chinese financial sectors.