China's money launderers exploited a gem of a loophole - Beijing just plugged it
anti-money-laundering operations widens and authorities move to counter such criminal activity by plugging creative loopholes.
Transactions involving precious metals and gems that exceed a certain threshold will need to be reported to the nation's financial crime watchdog.
In this explainer, the Post delves into China's latest anti-money-laundering regulation on transactions involving precious metals and gems, with expert insight into why Beijing imposed the rule.
What is the new regulation?
The latest regulation sets out compliance requirements for dealers trading physical precious metals and gems – including raw materials and processed items such as coins, standard bars and ingots, and jewellery, according to an announcement from the People's Bank of China.
Dealers must report any single cash transaction by a customer – or multiple transactions in one day – that total 100,000 yuan (US$13,870) or more, or the equivalent in foreign currency, to the central bank's anti-money-laundering centre within five working days.
Additionally, if a dealer has reasonable grounds to suspect that a customer intends to use such transactions to launder money, they must file a report, regardless of the transaction amount.
Why did China enact the regulation now?
This is China's first anti-money-laundering regulation that expands the scope of supervision beyond traditional financial institutions to target specific sectors, according to a commentary by lawyers at Shanghai-based Fangda Partners.
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