China Country Summary
Sanctions
High Concern
FATF AML Deficient List
Low Concern
Terrorism
Medium Concern
Corruption
Medium Concern
US State ML Assessment
High Concern
Criminal Markets (GI Index)
Medium Concern
EU Tax Blacklist
Low Concern
Offshore Finance Center
Low Concern
Please note that although the below Summary will give a general outline of the AML risks associated with the jurisdiction, if you are a Regulated entity then you may need to demonstrate that your Jurisdictional AML risk assessment has included a full assessment of the risk elements that have been identified as underpinning overall Country AML risk. To satisfy these requirements, we would recommend that you use our Subscription area.
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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.
Bribery & Corruption
Rating |
0 (bad) - 100 (good) |
|---|---|
| Transparency International Corruption Index | 43 |
| World Bank: Control of Corruption Percentile Rank | 54 |
Since 2012, China's anti-corruption campaign has led to extensive investigations across various sectors, resulting in millions of cases and significant punishments, including life imprisonment for private sector corruption. Despite these efforts, corruption remains a substantial risk for businesses operating in China, with practices like bribery and political interference still prevalent. The enforcement of anti-corruption laws is inconsistent, and while the government encourages public reporting of corruption, criticism of central leadership is not tolerated.
Economy
In 2023, China's economy faced a significant decline in foreign direct investment (FDI), dropping to $163 billion, marking a 13.7% decrease from the previous year. Factors contributing to this downturn included a slower-than-expected economic recovery post-COVID-19, regulatory unpredictability, and rising tensions in U.S.-China relations, which have diminished investor confidence. Despite these challenges, China remains a major global player, ranking as the fourth largest FDI destination worldwide.
In 2023, China's investment climate faced challenges as foreign direct investment (FDI) dropped to $163 billion, marking a 13.7 percent decline from the previous year, attributed to a slower economic recovery post-COVID-19, regulatory unpredictability, and geopolitical tensions. The country ranks as the 11th most restrictive in terms of FDI, with significant barriers such as foreign ownership caps and joint venture requirements, which deter foreign investors. Despite these challenges, the Chinese government has introduced measures 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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- Key Findings
