In late December, the People's Bank of China (PBoC) said it would put non-bank payment institutions, internet micro-lenders and consumer finance companies under the scope of anti-money laundering (AML) and anti-terrorism financing supervision. The move comes belatedly, as fintech firms have played a large role in China's financial system for more than five years, and partially in response to a 2019 FATF review that found weaknesses in the country's AML controls.
"China should extend preventive measures, including reporting of suspicious transactions, to designated non-financial businesses and professions and online lending institutions and introduce requirements on domestic politically exposed persons," FATF said in its Fourth Round Mutual Evaluation report on China.
Several large cases involving tech firms occurred in 2020 that highlighted the risks insufficient oversight of non-financial businesses pose. A December Caixin report noted that a Hunan Province branch of Agricultural Bank of China discovered last May that a gig-job platform had recorded more than RMB 200 million in cash transactions in 12 days, largely during non-business hours. A police investigation revealted that the firm laundered money for telecoms fraud rings.
In November, authorities investigated Ant Group-backed Beijing Bujiao Technology, also a gig-job platform, for alleged money laundering activities. According to Caixin, the company is suspected of issuing more than RMB 1.3 billion in phony value-added tax invoices and being involved in illegal cross-border gambling.
Shenzhen authorities found that an online gambling site located overseas marketed its games on QQ Messenger and WeChat. The site told gamblers to use Alipay and WeChat Pay to make nearly RMB 2.6 billion in payments for illegal bets.
Meanwhile, in the U.S.'s National Defense Authorization Act of 2021, the Treasury Department said it would investigate risks China’s money laundering poses and work to counter them. The move by Treasury is "a major development and indicates that the U.S. government is finally taking this threat seriously,” Hudson Institute fellow Nate Sibley told VOA Mandarin.