If you follow new developments in global AML/CFT legislation, you should know that China in November passed a major revision to its "Anti-Money Laundering Law of the People's Republic of China," which takes effect on 1 January, 2025. Hidden in the additional tools available to the PRC is the establishment of Extraterritorial Jurisdiction of its AML laws. This means that, under certain certain circumstances, financial institutions in the West could end up being charged with violation of the PRC's powerful new legislation; Just imagine the effect on their China business.
Unfortunately, the restrictions on use of this expanded jurisdiction are broad enough for Chinese prosecutors to employ to just about any situation:
(1) Threatens China's sovereignty and security.
(2) Infringes on the legitimate rights and interests of Chinese citizens, legal entities and other organisations.
(3) Disrupts financial order in the PRC.
The effect on Western, and specifically US, financial institutions, will be carefully watched, taken in the context of public exposure of the billion dollar fraud, money laundering and corruption scandal that broke in 2024, regarding the five East Caribbean Citizenship by Investment (CBI/CIP). Since this new and impending Chinese legal tool has been known to the Western compliance community for some time, we wonder aloud if it has caused any of the major American banks that provide correspondent banking services to the CBI agencies to refrain from taking any action to close those accounts, due to a well-placed fear that China could respond by charging such a bank with money laundering, purely for political purposes. The half dozen US banks in the correspondent banking category all are engaged in international trade transactions with China.
Such an action would most likely have a serious economic effect on that bank's lucrative China business, and affect its ability to serve its international manufacturing clients. Is this why no major US bank has ignored the CBI scandal, possible loss of major business? This form of economic blackmail, bordering on extortion, may be the reason American banks are asleep on the CBI money laundering issue.
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