capital flight

China publishes gallery of alleged financial fugitives

FCA china-financial-fugitives

China’s Ministry of Public Security has released information about economic fugitives (pictured) who were believed to be at large in other countries, including Australia. China Ministry of Public Security

The Communist Part of China’s crackdown on corrupt officials has created a wave of economic fugitives, who are fleeing China to escape trial. The Ministry of Public issued the photos above of alleged economic fugitives from China, many of whom are thought to be in Australia.

The Chinese diaspora is widespread. Since President Xi Jinping began his campaign to root out corruption from the Chinese Communist Party, stories of alleged financial criminals fleeing China to live with relatives in other countries have cropped up in the media. Last year, the focus was the US, thought to be a safe haven from extradition. Now the focus is Australia, another country which has an extradition treaty with China, but which has yet to ratify it.

In March this year, China reportedly gave the US a list of allegedly corrupt officials, thought to be in the US and asked for help in tracking them down. The Chinese government launched Operation Foxhunt  in summer 2014, in a bid to track down suspects on-the-run beyond China’s borders.

Back in February 2014, Financial Crime Asia reported on the expected surge of fugitives to Australia. Canada had apparently been the migrant’s destination of choice, until it scrapped an investment immigration programme for Chinese citizens after noticing a marked increase in the number of applications by wealthy Chinese Mainlanders.

In 2013, China’s anti-corruption body, the Central Commission for Discipline Inspection, investigated 51,000 people for corruption, bribery, embezzlement and abuse of power. It claimed a total of 30,420 officials were punished for violating new party rules aimed at avoiding pomp and ceremony, according to a report in the Sydney Morning Herald.

How to spot an economic fugitive

Government officials are politically exposed persons and, thereby, subject to enhanced due diligence measures by banks and other regulated institutions in Australia, Canada and other jurisdictions. Whether the alleged criminals will be subject to extradition or not for the crimes they may or may not have committed, their inclusion on the ‘wanted list’ is enough to merit further enquiries by financial institutions.  The photo gallery above presumably gives the names of the officials in Pinyin. Any list monitoring software worth its salt will be able to translate the names into the Latin alphabet and should be able to identify whether any of the names above correspond to accounts held at a financial institution.

 

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Blacklists, PEPs, corruption and regulation. How is 2015 looking so far?

January 15th saw a round of face to face meetings for jurisdictions found to be lacking in the last FATF plenary, with the APG ML in Sydney.

Cambodia, Lao PDR, Pakistan, Afghanistan and Papua New Guinea  all made the last list.  Of the four countries on the high risk list three are in the Asia Pacific region – DPRK, Myanmar and Indonesia. The DPRK  has written to the OECD affirming its commitment to anti-money laundering and has apparently joined the APG as an observer.

Cuba managed to wriggle off the list of high-risk jurisdictions. While we have heard nothing much about its AML efforts, we can only assume that its new found close friendship with the White House has bought the former closed state a little wiggle room. Expect more news on trade barriers opening with Cuba.

ABC – Anti-bribery and corruption

This first ABC story provides a barometer for how the anti-corruption campaign is taking effect in Turkey. A parliamentary committee in Turkey has voted not to pursue investigations into four former ministers accused in a corruption scandal that implicated former Prime Minister Erdogan. Nine members of the 14-strong commission were members of Erdogan’s AK Party. Read more here.

The former president of Taiwan, Chen Shui-bian , currently in the fourth year of a 20 stretch for corruption, has been granted medical leave for brain surgery. But it’s not all rosy for Chen, who is facing a new round of money laundering charges. This time, charges allege he laundered TWD10m (USD321,000) in the proceeds of a bribe through his brother-in-law.

IllegalLogging2

The scale of illegal logging – http://www.illegal-logging.info

Transparency International calling for a bit of light to be shed on what the Solomon islands is doing. A man with close
connections to the logging industry has just been named the new Minister of Forestry for the island nation. Anyone else smell a conflict of interests?

ML and capital flight

Bangladesh – Bank Bangladesh, the central bank and financial intelligence unit has set up a new arm to tackle the high risk areas of TBML and terrorist financing. The move is part of the BB’s initiative to stop capital flight from Bangladesh.

Regulation

CapGemini is predicting a new era of regulation – which is great news  for regulatory professionals. Simplified operations, e-banking,  mobile  banking and other new forms of banking will take prominence, according to the report.

It also echoes a call for a reduction of banker bashing – an easy sport for many, especially those who are not employed in banking. Banker bashing may soon become a thing of the past; not because they all stop taking cocaine and becoming good people , although according to this  Guardian report it has happened , but because new financial firms, relying on new technology, will supersede banks.

Banks are like enormous cruise ships once built in Europe’s shipyards – requiring millions of hands to operate, weighed down by tonnes of heavy metal and taking aeons to change course. New smaller, lighter firms can evolve, develop and zip around the market with as much flexibility as new millennial customers require.

China’s regulators have published new AML guidance to help insurers to play their part in the fight against money laundering. More details are available via a subscription here. Also check the China Insurance Regulatory Commission for more updates.

A sombre note to conclude, and remind us of the battles some of our colleagues face when reporting financial crime to the authorities. Three policemen are under arrest in Vietnam charged with plotting to murder a witness in a bribery case.

First published on the ICA blog in January 2015.