China's New AML Law Takes Effect: Strengthening Financial Crime Combat and Wildlife Protection Efforts

On 29 December 2024, TRAFFIC China supported Peking University Law School in organizing a closed-door forum to discuss the effective implementation of the revised AML Law of China. The event brought together 50 participants from a diverse range of institutions, including the Beijing Branch of the People's Bank of China (PBOC), the Anti-smuggling Bureau of China Customs, the Beijing Dongcheng District People's Procuratorate, the Agricultural Bank of China, the Postal Savings Bank of China, Deloitte, Agile Century, and other entities from both the public and private sectors, as well as representatives from academia and NGOs.

At the forum, Ms. Ling XU, Director of TRAFFIC China, presented key findings from the research report titled Analysis of Trafficking of Protected Wildlife and Their Products in China from 2017 to 2021. She emphasized the importance of employing AML approaches to investigate wildlife crime and urged all participants to focus on activities related to illegal wildlife trade (IWT) in the daily monitoring of financial flows. A post-forum survey revealed that 88% of participants reported an increased understanding of the implementation of AML-related laws applied in combating wildlife crime, indicating the forum's success in fostering collaboration and enhancing knowledge among stakeholders.

Key Amendments

The new AML law introduces a shift from a rigid, rule-based approach to a more flexible, risk-based model compelling financial institutions to reassess their strategies in managing ML risks associated their clients.

Key amendments to the law, as outlined by Mr. Mingyou Bao, Director General of the AML Bureau of the PBOC, include:

• Refining the concepts of AML by expanding the original "seven categories of predicate crimes for money laundering" to include "other crimes," meeting the requirements of international treaties and standards regarding predicate crimes for AML.
• Establishing a "risk-based" approach in both regulatory and institutional levels.  
• Clarifying the division of AML regulatory responsibilities: the AML administrative department supervises and manages AML in financial institutions, while financial regulators ensure AML compliance during market entry.
• Enhancing AML regulations for designated non-financial businesses and professions (DNFBPs) by defining their scope, assigning regulatory duties to industry authorities, outlining obligations based on industry risks, and specifying legal liabilities for non-compliance.
• Boosting AML obligations for financial institutions, covering aspects such as internal control systems, customer due diligence, ML risk management, suspicious transaction reporting, and record-keeping.
• Introducing beneficial ownership requirements
• Implementing special preventive measures against ML, entities and individuals are required to cease financial services and restrict fund and assets transfers for UN Security Council-sanctioned targets, as well as comply with other requirements of relevant state authorities
• Strengthening monitoring and prevention of emerging ML risks, including those involving virtual assets
• Reinforcing legal liability provisions to promote rectification and compliance through penalties

The new law also places a stronger emphasis on international cooperation, enhances investigative protocols, and safeguards the confidentiality of AML-related information. It mandates that individuals and entities cooperate in customer due diligence, marking a significant leap forward in creating a more comprehensive and integrated AML framework.

TRAFFIC’s AML Initiatives in China

Starting in September 2022 and funded by INL, TRAFFIC implemented a project titled "Money Laundering and the Illegal Wildlife Trade in China." The project aimed to enhance China's determination and capability to investigate, arrest, prosecute, convict, and sentence wildlife crime perpetrators to the full extent of the law, with an emphasis on AML strategies. By the end of December 2024, the project had organized four training sessions for financial institutions, attended by 465 financial practitioners, and eight training sessions for law enforcement officers, with a total of 770 participants. In 2024, TRAFFIC played a pivotal role in bridging the AML knowledge gaps for both the public and private sectors through the following events:

20 June and 27 November: In partnership with Wuhan University, two webinars were held, focusing on leveraging AML measures to combat wildlife trafficking. These webinars attracted over 100 participants from financial institutions, law enforcement agencies, academia and NGOs.

8-11 July:  A presentation titled “Trade-Based Money Laundering in Wildlife” was introduced at a national customs training workshop on anti-wildlife trafficking, engaging 61 frontline Chinese customs officers 

8 August: An expert review meeting was held with Anti-smuggling Bureau of China Customs to refine training materials for financial investigations.

9 August: An AML training session was delivered to around 200 officers from 16 anti-smuggling units across five provinces in Southern China.

10-11 October: A seminar on cross-border AML cooperation was hosted in Chengdu, attended by 50 representatives from 14 anti-smuggling units. The seminar focused on case studies and legal challenges, with Professor Wang Xin from Peking University presenting on judicial interpretations.

29 October: An online training session was conducted for the Agricultural Bank of China and its overseas branches in Seoul, Hanoi, Sydney, Dubai, Tokyo, Moscow, Macau SAR, and Hong Kong SAR. The training covered traits of wildlife trafficking, high-risk species, common regions, laundering techniques, and red flags, with 25 participants in attendance.

29 December 2024: A closed-door High-level Forum on Money Laundering Governance under the Revision of the Anti-Money Laundering Law was conducted in Beijing, co-organised with Peking University Law School, with 50 participants.

Conclusion

Overall, China's current AML Law has been systematically enhanced to ensure its effective implementation. The revisions bring the law more in line with international standards, especially regarding the AML obligations of DNFBPs and the transparency of beneficial ownership. These improvements are expected to strengthen China's performance in the Financial Action Task Force (FATF) fifth round of mutual evaluations in November 2025, thereby increasing the compliance and effectiveness of the assessment outcomes.

While the use of AML methods to investigate wildlife crime is still limited and financial institutions' awareness of IWT requires further enhancement, the ongoing enforcement of the AML Law is anticipated to disrupt the financial networks of wildlife crime syndicates, contributing to their eventual dismantling. Looking ahead to the CITES CoP20 in Uzbekistan this November, there is an expectation that the application of AML strategies to combat wildlife trafficking will garner significant attention from all parties. This focus should foster increased cross-border collaboration to address the full spectrum of financial flows associated with wildlife crime.