China has a large and complex financial system including some of the world’s largest commercial banks. Credit card fraud is the most common fraud type that commercial banks in China face. In every 10,000 credit cards issued by the Postal Savings Bank of China, there were 0.83 cards related to credit card fraud, ranking first among the leading ten credit card issuers. As China keeps opening its financial sectors to foreign institutions and investors, China is also increasingly involved in global financial crimes.
Corruption of government officials has been a serious problem threatening China’s national property and the governance of China’s Communist Party. Since the launch of the anti-corruption campaign led by President Xi, hundreds of officials and Communist Party members in China have been investigated and prosecuted. Corrupt officials and their families used to transfer their illegal properties abroad. Due to its special position in the world’s financial market and political independence, Hong Kong has always been an essential destination for illegal property transfer for Chinese officials and other rich people from Mainland China. Many mutual legal assistance requests received by Hong Kong's authorities were related to corruption offenses.
The People’s Bank of China (PBC), the main supervisor of China’s financial institutions, is China’s central authority responsible for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT). The PBC operates the Financial Intelligence Unit (FIU) which deals with suspicious transaction reporting and executes investigations and supervision of financial institutions. The Joint Financial Intelligence Unit (JFIU) in Hong Kong is operated by staff members from the Hong Kong Police Force and the Hong Kong Customs & Excise Department. It is responsible for analyzing reporting on suspicious financial transactions, disseminating them further to other authorities and providing financial institutions with handling suggestions.
As member of FATF, China keeps sharing information on suspicious transactions with other FATF partners and improving its framework for Anti-Money Laundering and Combating the Financing of Terrorism. According to recommendations of FATF, China's authorities still need to raise their awareness of risks in non-bank financial institutions and other non-financial businesses including non-profit organizations. Over the years, the size of penalties applied to financial institutions in China has been increasing, and more onsite inspections from the PBC in the banking sectors are expected.