Wildlife crime is intrinsically linked with money laundering. In 2019, the United Nations (UN) General Assembly adopted two resolutions that underscore the seriousness of wildlife crime due to its high profitability and transnational nature. The resolutions call on UN members to recognise illegal wildlife trade (IWT) as a predicate offence for money laundering.

This report "A Review of China's Anti-Money Laundering Laws on Combating the Illegal Trade in Wild Species: A Comparative Analysis of National Legislations in the United States, the United Kingdom, and China" released by TRAFFIC, explores the suitability of China's current AML framework, as well as the newly revised Draft Amendment on AML, to combat wildlife-related crimes in three aspects: legislation and enforcement; supervision and administration; and international collaboration.

Key findings

legislation and enforcement

This study identifies several areas within China's current legislative and enforcement framework that could be further developed to strengthen the effectiveness of AML investigations related to IWT. 

Currently, China's AML law designates money laundering as a criminal offense, especially when it's connected to seven enumerated predicate crimes, such as smuggling. Regarding wildlife crime, the explicit link to money laundering is formally established for the smuggling of protected species. This presents an opportunity to formally extend the explicit linkage to encompass a broader range of wildlife crimes, including poaching, illegal logging, and illegal trade. For such crimes outside the designated categories, provisions addressing the concealment of illicit proceeds primarily apply to third parties, suggesting a potential area for clarifying the applicability to perpetrators concealing their own proceeds.

Furthermore, while China has established a robust procedure post-conviction asset forfeiture regime, there is scope to clarify further the procedures for seizing property of "equivalent value" in IWT-related cases to maximise the deterrent impact. Enhancing the framework for proactive collaboration with overseas financial institutions would also strengthen the capacity to trace and investigate the cross-border movement of illicit funds, thereby addressing a key component of the transnational IWT network.

We believe this analysis can be a powerful tool. It provides a critical foundation to help China's enforcement and judicial systems become more effective in tackling wildlife crime from investigation to conviction by following the money trail.”

Linda Chou, Author of this report, AML project manager of TRAFFIC China Programme.

Supervision and Administration

This study also identified opportunities to enhance China's financial compliance system by expanding its coverage of high-risk money laundering sectors. There is potential to strengthen the framework by providing clearer guidance on suspicious transaction reporting standards and reinforcing the incentives for compliance. These developments would further improve the system's capacity to support law enforcement in tracking illicit financial flows linked to wildlife crime.

This analysis also highlights promising avenues for advancing information-sharing, both between the public and private sectors, and among key government agencies involved in wildlife, forestry, and AML investigations. Building upon existing mechanisms, such as the Inter-ministerial Joint Conferences on Anti-Money Laundering convened by the People's Bank of China (PBC), represents a key opportunity to foster more integrated public-private engagement.

Countries everywhere, including China, who wish to combat wildlife crime using anti-money laundering techniques, can learn from the valuable recommendations within this report, including the strength of public-private partnerships, the importance of inter-agency collaboration, and the value of conducting wildlife-related financial investigations.”

Anne-Marie WEEDEN, Senior Research Fellow, RUSI

International cooperation

This report acknowledges China's established framework for combating IWT through financial investigations, which currently relies on international financial intelligence exchanges via key bilateral agreements. Further diversifying these international cooperation channels presents a significant opportunity to enrich the breadth and depth of actionable data.  

Chinese authorities primarily use international cooperation channels, such as INTERPOL alerts. Enhancing these channels by fostering stronger collaborative partnerships and mutual legal frameworks remains a valuable area for development to maximise their potential.

Coordination across multiple authorities in China involves a comprehensive, multi-tiered decision-making process. Streamlining these procedures offers a clear pathway to increase the efficiency of processing overseas legal assistance requests.

Positively, China's recent alignment with updated international asset recovery standards (effective from 2023) significantly strengthens its capability to recover illicit assets moved aboard, providing a powerful new tool in transnational IWT cases.

This report allows the international community to better understand how AML measures could be applied to combat wildlife crime in China and contribute to international law enforcement and mutual judicial assistance in the future."

Stephanie PENDRY, Senior Advisor, Information and Enforcement Support, TRAFFIC

Filling the gaps

The September 2024 Draft Amendment to Anti-Money Laundering presents a significant opportunity to address key gaps in the existing AML Law. Its enactment would align China's AML standards with international best practices, particularly in combating the financial flows linked to wildlife crime.
Notably, the newly revised Draft Amendment expands the scope of predicate crimes beyond the existing seven categories to explicitly include offences such as poaching and illegal logging, thereby disrupting the profit motive for these activities. It introduces more robust provisions for asset recovery and clarifies the law's extraterritorial reach, empowering authorities to trace illicit funds more effectively across borders. It also broadens the monitoring network by extending AML obligations to high-risk non-financial sectors such as real estate and legal services. These improvements are poised to substantially strengthen China's legal capacity to prosecute IWT-related money laundering activities. 

Recommendations

Like many other crimes, following the financial trail within IWT chains is key to exposing high-level perpetrators and disrupting the funding that sustains these criminal operations. This report outlines actionable steps for relevant authorities to foster greater collaboration and enhance the use of financial investigative techniques.

For Lawmakers/legislators - Secure the passage and enactment of the Draft Amendment to the AML to expand its scope to cover a wider range of wildlife-related predicate crimes.

For AML Administrative Authorities - Strengthen mechanisms for inter-departmental coordination, public-private partnership, and international cooperation to improve the flow and utility of financial intelligence.

For Central Authorities Handing International Legal Assistance - Provide training and guidance to equip officials with the skills to navigate international legal frameworks effectively, thereby building stronger partnerships and ensuring more efficient cross-border judicial cooperation.

For Law Enforcement Agencies - Improve awareness and build operational capacity to identify concealed illicit items and to conduct parallel financial investigations. Proactively utilise international criminal justice channels when handling cases involving cross-border money laundering and fund transfers.

For Financial and Designated Non-Financial Institutions - Strengthen the ability of compliance professionals within financial and non-financial institutions to monitor, recognise, and report suspicious transactions potentially linked to IWT.

 Useful links

 E-course

Illegal Wildlife Trade Toolkit

Report: Illegal Wildlife Trade and the Banking Sector in China