China faces higher risk of money laundering and financing of terrorist groups, central bank official warns

China faces the greater risk of money laundering and the financing of terrorist groups as the nation becomes more closely integrated into global markets, a senior official at the People’s Bank of China warned on Tuesday.

“Risks of money laundering and terrorist financing are further increasing in line with cross-border uses of the yuan, the rise of internet financing and the opening of capital accounts,” said Hao Jinghua, deputy director at the anti-money laundering bureau at the central bank.

Hao told the annual meeting of the Association of Certified Anti-Money Laundering Specialists that China was among countries under growing pressure to fight financing operations by criminal groups.

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Increased concerns about terrorism and money laundering meant the issues went beyond the realms of economics and finance and affected social stability and national security, said Hao.

An anti-money laundering expert with a financial institution based in Beijing said the wider use of yuan as the settlement currency in global markets, the risk of the yuan being used as the transaction currency by criminals is heightened.

“As China is becoming more opening, the anti-money laundering and criminal financing has expanded to more areas, from financial frauds to human trafficking and smuggling,” the expert said.

Tong Wenjun, a researcher at the central bank’s anti-money laundering monitoring and analysis centre, said on Monday at the forum that China must counter the challenge created by terrorist financing.

He said suspected terrorists operate business in coastal area such as the Yangtze and Pearl River Deltas in China as a front, leveraging banks, underground banks and remittance services abroad to transfer large amounts of money.