On Thursday, the corruption trial of fallen Chinese leader, Bo Xilai, is scheduled to begin. While it may reveal more details of the dark art of corruption of one senior Chinese PEP, more important to Western compliance officers is the clear and present danger posed by the so-called princelings, the offspring of China's senior leadership, who have been busy accumulating obscene amounts of wealth, through bribes and kickbacks. I have previously warned readers of this blog of the hazards of banking dirty PEP money from China.
Whether you are bound by the Foreign Corrupt Practices Act, the Anti-Bribery Act, or another similar law, it is clear that PEP wealth, if the owner is a Chinese national, is often illegally obtained, and as a compliance officer in a Western bank, you must act as the gatekeeper, and keep it out of your institution, for both business, and reputation damage, reasons. Enhanced Due Diligence should be required on all high net-worth Chinese banking overseas, for you do not know whether the client is a disguised PEP, or a front man (or woman) for a corrupt PEP; There's more.
If I was a money launderer for a wealthy, corrupt Chinese PEP, I would find a source for a passport, from Singapore, Malaysia, Taiwan, or some other jurisdiction where Overseas Chinese reside, and have my client proffer that to an EU or US bank, to lessen suspicion that he was indeed a PEP. I would also form a front company in a jurisdiction, outside the Peoples' Republic, to further bolster my client's fictional profile as a businessman.
As US government regulatory, and law enforcement, agencies, delve deeper into potential crimes that may have been committed, by US companies, with Chinese PEPs, princelings, or their associates, it is in your best interests to identify, interdict, and exit such potentially damaging banking relationships, before their names appear in the New York Times.