China Country Summary
Sanctions
Higher Concern
FATF AML Deficient List
Lower Concern
Terrorism
Medium Concern
Corruption
Medium Concern
US State ML Assessment
Higher Concern
Criminal Markets (GI Index)
Medium Concern
EU Tax Blacklist
Lower Concern
Offshore Finance Center
Lower Concern
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Anti Money Laundering
FATF Status
China is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in China was undertaken in 2022. According to that Evaluation, China was deemed Compliant for 9 and Largely Compliant for 22 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 3 of the Effectiveness & Technical Compliance ratings.
Sanctions
China implements two types of economic sanctions: those mandated by the United Nations and its own counter-sanctions against foreign entities. The Ministry of Foreign Affairs and the Ministry of Commerce are responsible for administering and enforcing these sanctions, particularly in relation to contested territories like Taiwan and Hong Kong.
The U.S. has imposed sanctions on Chinese entities for dealings with blacklisted Russians and issued an Executive Order to restrict investments in Chinese military companies. The EU maintains an arms embargo against China, citing human rights concerns, while the UK warns of attempts by Russia to circumvent sanctions through intermediary countries, including China.
Criminality
Rating |
0 (bad) - 100 (good) |
|---|---|
| Transparency International Corruption Index | 43 |
| World Bank: Control of Corruption Percentile Rank | 54 |
Since 2012, China has implemented a significant anti-corruption campaign, expanding investigations to include various government sectors and state-owned enterprises, with millions of cases reported and substantial recoveries from alleged fugitives. Despite these efforts, corruption measures are inconsistently applied, and civil society's role in combating corruption remains limited. Additionally, criminal activities such as human trafficking, drug trade, and cybercrime persist, exacerbated by centralized power structures and inadequate law enforcement, highlighting systemic governance challenges.
Economy
In 2023, China's economy faced challenges as inbound foreign direct investment (FDI) dropped to $163 billion, marking a 13.7 percent decline from the previous year. Factors contributing to this downturn included a slower-than-expected economic recovery post-COVID-19, regulatory unpredictability, and geopolitical tensions, particularly with the U.S. Despite these issues, China remained the fourth-largest FDI destination globally, with ongoing efforts to improve the foreign investment environment through tax incentives and regulatory reforms.
In 2023, China's investment climate faced challenges as foreign direct investment (FDI) fell to $163 billion, marking a 13.7% decline from the previous year, attributed to a slower economic recovery post-COVID-19, regulatory unpredictability, and geopolitical tensions. The PRC remains the 11th most restrictive country for FDI, with significant barriers such as foreign ownership caps and joint venture requirements, which deter foreign investors. Despite these challenges, the government has made efforts to improve the foreign investment environment, including extending tax holidays for foreign investors until 2027.
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- Risk Analysis
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- FATF Status
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- Key Findings