Financial crime prevention in China: 2017 in review
27 Dec 2017

By Amos Wittenberg

Chinese government officials have a penchant for list-based slogans: the Four Modernizations, the Three Represents, or, to give a more recent example, Xi Jinping’s twelve Core Socialist Values of the Chinese Dream, enumerated on posters around the country.

To summarise a tumultuous year of changes to the country’s financial crime prevention regime, I’ve devised my own, the four Cs: Corruption, Crackdowns, Cryptocurrencies and Correspondent banking.


China’s anti-corruption campaign, which has indicted more than 100,000 people and ‘punished’ over a million, showed no sign of slowing as Xi Jinping entered his second term in office.

Casualties this year included the mayor of Tianjin; Lu Wei, formerly in charge of internet censorship; a former chairman of the state-owned China Resources Group; and, amusingly, seventeen staffers of the Central Commission for Discipline Inspection (“CCDI”), the body responsible for anti-corruption efforts.

At the 19th Party Congress in October, the Chinese Community Party (“CCP”) reinforced its commitment to the campaign. President Xi praised its successes and talked of the need for an unending effort to eradicate the ‘gravest threat’ the party faces.

In light of this perceived threat, plans are underway to create a National Supervision Commission that would expand the CCDI, transforming it into a larger, governmental agency (rather than an internal party organ), and expand its reach from the ninety million or so CCP members to tens of millions more public sector employees.

There have also been suggestions that simply removing corrupt officials may not be enough: the South China Morning Post reports on claims that Dalian, a port city near the border with North Korea, is still ‘poisoned’ by the legacy of Bo Xilai, who was one of the first “big tigers” to fall to the campaign back in 2012.

Whilst Xi’s anti-corruption efforts serve an obvious political end, helping him remove potential opponents, there were also signals this year that corruption is viewed as a serious issue in China outside of politics.

In Shenzhen, China’s Silicone Valley, for example, the Market Supervision Commission introduced an anti-bribery management system based on international standard ISO 37001.


According to the Ministry of Public Security, Chinese police recovered ¥35.6 billion RMB ($5.4 billion USD) and closed 168,000 financial crime cases in 2016.

The figures for this year are likely to be even higher, as the government responds to an ‘epidemic’ of financial scams plaguing the country.

August saw tough talk from the Supreme People’s Protectorate, which said it would ‘strictly crack down’ on financial crimes; a month earlier, the People’s Bank of China announced it was training nearly half a million anti-money laundering experts.

These developments fit a broader trend on which I have reported in the past.

In Xi Jinping Thought, lately enshrined in the CCP constitution, China’s new era involves a move from ‘rich’ to ‘strong’.

As echoed in the US in the debate around Dodd-Frank, China’s economic decision makers recognise that stability might have to be played off against economic growth.

But with the emphasis firmly on strength above riches, the country is taking meaningful steps towards tackling systemic risks in its economy, which include both financial crime and burgeoning debt.

In November the government launched a new super regulator, headed by Vice-Premier Ma Kai. The agency will supervise both monetary policy and regulation, formulate policies on China’s financial security, and guide local
governments(which are largely responsible for the debt crisis) in sustainable financial development.


At the turn of last year China accounted for nearly 90% of trading in the leading cryptocurrency bitcoin.

Then in a surprise move in early September, China’s central bank ordered an immediate ban on initial coin offerings, the unregulated alternative to IPOs for tech forward start-ups. Ten days later, Chinese cryptocurrency exchanges were ordered to stop trading.

Most had ceased all domestic trades within just two weeks of the order, although peer-to-peer trading exploded on China’s social media and online retail platforms.

The ban hit the value of crypto-currencies hard, but the correction was short lived. Trading in Japan, South Korea and elsewhere quickly began growing to fill the gap left by China.

A month later the value of bitcoin crossed the US$5,000 mark for the first time, on rumours that the ban might be reversed. At time of writing, one bitcoin is worth over US$17,000.

The future of China’s crypto policy is unclear.

Their meteoric rise in value over the last six weeks has prompted sighs of relief from some officials: the Vice Governor of China’s Central Bank suggested that the ban came not a day too soon, and said that he was waiting for the day when ‘bitcoin’s corpse floated past him down the river.’

As discussed, Chinese regulators value stability above all and are unlikely to open markets to a perceived threat. But they also value growth, and want to be seen to be embracing innovation.

At local and municipal levels, at least, there is government money in numerous projects that make use of the distributed ledger technology on which cryptocurrencies are based.

Correspondent banking

As the situation in North Korea worsened over the year, with the Kim regime making rapid advances in both technological capacity and belligerence, the US turned to secondary sanctions to try to cut off funding to the regime’s nuclear programme.

Amongst the targets of US regulators were a number of Chinese banks, accused of providing correspondent banking services to the North that allowed it to make dollar transactions and access international markets.

Beijing reacted angrily, demanding that Washington immediately ‘correct its mistake’, though the two governments are gradually coordinating efforts against the threat from the rogue state.

In other sanctions news, China’s third-biggest lender was fined US$215 million by American regulators in March this year, after Reuters revealed that one of its accounts had been used to fund ethnic rebels fighting government troops in Myanmar.

All in all then an eventful year, and one which has seen some meaningful developments in China’s financial crime prevention regime.

Looking ahead to 2018 all four Cs seem set to remain significant, with the National Supervision Commission, slated to begin operations in March, likely to be among the first major stories of the new year.

Amos Wittenberg is a freelance writer and former editor of KYC360. He is currently studying in Beijing.

Related topics:

The decline and fall of Cryptochina: Beijing bans ICOs and forces exchanges to close

China: Changes afoot in regulation and anti-corruption as country sets course for the next five years

Artificial intelligence in Asia: who’s the boss – Singapore, China or Japan?

Count this content towards your CPD minutes, by signing up to our CPD Wallet