Financial Integrity Network Issues Policy Alert on Illicit Financing Threats


Juan Zarate

A Financial Integrity Network policy alert says illegal financing threats and weaknesses in China’s anti-money laundering/countering the financing of terrorism measures increase the risk posed by criminal actors operating in the East Asian country to multinational corporations and banks worldwide.

FIN said in the alert released Friday that China has become a manufacturing hub for counterfeit goods and illegal drugs as well as a destination for bank fraud proceeds.

According to the report, a Department of Justice investigation showed that three Chinese banks have been involved in North Korea-related sanction evasion activities.

The Financial Action Task Force conducted an assessment in April and found that China had a low effectiveness level when it comes to enforcing policies meant to address illicit finance. FATF also discovered that financial institutions in the country lack sufficient understanding of risks associated with terrorist financing and money laundering.

FIN advised multinational firms and financial institutions to “consider implementing specialized controls to manage their China-related risk that are commensurate with specific direct and indirect exposure to China, with China-specific segmentation for both customer due diligence and transaction monitoring.”

Juan Zarate, a 2016 Wash100 award recipient, is chairman and co-founder of the strategic advisory firm.

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