Money laundering and illicit flows from China – the real estate problem

Mohammed Ahmad Naheem

Journal of Money Laundering Control, 2017, vol. 20, issue 1, 15-26

Abstract: Purpose - This paper aims to review some of the current challenges that international money laundering schemes are posing for the Chinese banking sector. Anti-money laundering (AML) systems in China are relatively new, and customer due diligence checks and other AML systems are underdeveloped in some areas. Design/methodology/approach - This paper considers the specific issues that laundering money through the real estate sector poses to the Chinese banking system and other global banks that could be in receipt of illicit funds from China. The paper also discusses the source of most of China’s illicit flows, which are believed to be from corruption and financial crime offences rather than drug or organised criminal gangs. Findings - The paper uses empirical evidence, including media coverage and academic studies from other authors working on this issue, and supports the need to develop stronger risk-based systems, as opposed to rules-based systems, for managing AML risk assessment. Previous work by the author and suggestions from other authors are both used to suggest a basic framework for AML risk assessment. Originality/value - The paper concludes by reiterating the fact that China like all other countries is now operating in an international banking context, in much the same way that international organised crime is also operating at a global level. It also emphasises that real estate remains a targeted sector for criminals seeking to launder funds.

Keywords: Money laundering; Real estate; Beneficial ownership; Politically exposed persons; China banking system; Trade-based money laundering (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-08-2015-0030

DOI: 10.1108/JMLC-08-2015-0030

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