Thursday, June 11, 2015


Zhou Yongkang and Bo Xilai
After a secret trial, Zhou Yongkang, the chief of China's domestic security apparatus, has been sentenced to life in prison, based upon corruption charges. He reportedly, according to official Chinese sources, accepted $21m in bribes, abused the powers of his office, and disclosed classified information. His punishment also included seizure of all his assets, and expulsion from the Chinese Communist Party.

Politically, Zhou, who was said to be closely allied with the disgraced Chinese leader, Bo Xilai, may have fatally crossed Party leadership in doing so, and paid the price for his support of Bo. China claims that it has recovered the bribes and other items of value.

Compliance officers would do well to appreciate that this very public case is intended to sent a blunt message to China's PEPs: if the government catches you accepting bribes & kickbacks, it could cost you the rest of your life. Expect that corrupt Chinese PEPs will probably now take extra care in obscuring their true identities, as well as the source of funds of their illicit cash, which they are moving overseas, to avoid discovery by Chinese authorities.

While we generally avoid profiling, compliance officers at international banks engaged in offering private banking services should conduct enhanced due diligence on all ethnic Chinese, irrespective of whether their documents show they come from China, Hong Kong, Singapore, or other countries in Southeast Asia, for Chinese PEPs, anxious to hide their PEP status, may now be presenting, at account opening, bogus identities that pass all but the most detailed scrutiny.

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