Thursday, November 13, 2014


If you had any doubts about the advisability of obtaining information that casts China, or its leadership, in an unfavorable or controversial light, the country's president, Xi Jinping, has laid down the law: there will be be consequences for those foolish enough to report it. Xi's cryptic, though easily understandable, statement, has confirmed that foreign journalists that expose China's flaws, or of those in command, will lose their visas, as will their colleagues at their media companies.

This official pronouncement, which came at the time of the visit of the President of the United States to a summit meeting in Beijing, reinforces our the fact that we have problems when conducting due diligence upon Chinese nationals; there may be a dearth of published truth about individuals we are looking at for risk management purposes at account opening. Given that we already take it for granted that negative information about Chinese PEPs, and powerful business leaders, does not see the light of day, in domestic media, due to censorship and threats of retaliation,  we are now presented with a future where foreign investigative journalists will be deterred from visiting China, especially if they have previously be critical of China, or published negative information of any kind about its leadership. There may be no negative business intelligence to troll through.

Sources of information from Hong Kong may end up as the only useful avenue for your due diligence inquiry, but even those trusted assets may now decline to conduct field investigations within the Peoples Republic, lest their quest for non-public information afield result in their arrest and conviction.

The ability of a compliance officer to obtain current, objective, and truthful, information about Chinese nationals has become extremely difficult for gatekeepers at Western financial institutions. Is he a PEP, masquerading as a private businessman ? Is he a military officer in civilian clothes ? You cannot answer those critical questions with any degree of certainty, I fear, when it comes to Chinese nationals; be careful when conducting Customer Identification Procedures for account opening.

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