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.

Since 2012, China has implemented a significant anti-corruption campaign led by the CCP, which has resulted in millions of investigations and thousands of punishments, including the establishment of the National Supervisory Commission to oversee both party and government officials. Despite these efforts, corruption remains a persistent issue affecting the business environment, with companies facing risks such as bribery and political interference. The enforcement of anti-corruption laws is inconsistent, and while the government encourages public reporting of corruption, criticism of central leadership is still considered a threat to stability.

China's economy, despite being the fourth largest destination for foreign direct investment (FDI) globally, experienced a significant decline in FDI in 2023, dropping to $163 billion, a 13.7% decrease from the previous year. Factors contributing to this downturn include a slower-than-expected economic recovery post-COVID-19, regulatory unpredictability, and geopolitical tensions, particularly with the U.S. Additionally, the PRC's restrictive investment policies and increasing scrutiny on foreign businesses have further dampened investor confidence.

In 2023, China's Foreign Direct Investment (FDI) fell to $163 billion, marking a 13.7% decline from the previous year, largely due to a slower economic recovery post-COVID-19 and various investor concerns such as capital controls and regulatory unpredictability. The country ranks as the 11th most restrictive in terms of FDI, with significant barriers including foreign ownership caps and joint venture requirements, which deter foreign investors. Despite these challenges, the Chinese government has made efforts to improve the investment environment, including extending tax holidays for foreign investors until 2027.