Top court gets tough on money laundering
December 08, 2009 | BY
clpstaff &clp articles &A new interpretation issued by China's highest court increases the burden on those defending themselves against money laundering allegations and clarifies…
A new interpretation issued by China's highest court increases the burden on those defending themselves against money laundering allegations and clarifies what is needed to establish prima facie evidence of the knowledge element of the crime.
The Supreme People's Court issued its Interpretation on Several Issues Concerning Specific Application of the Law in Trials of Criminal Cases Such as Money Laundering (最高人民法院关于审理洗钱等刑事案件具体应用法律若干问题的解释) on November 4 2009; it took effect on November 11.
The interpretation establishes that the knowledge element (similar, in this case, to the mens rea element familiar to common law lawyers) required to prove the offence of money laundering can be inferred from objective factual circumstances including suspicious activities such as purchasing property well below the market price or assisting someone to deposit a large sum of money in different bank accounts. Once the prima facie evidence is raised, it will then be up to the defendant to rebut the presumption.
“This important change shifts the burden of proof from prosecutors to defendants in [money laundering] cases,” said Adam Ehrlich, chief representative in the Shanghai office of Diaz Reus.
Peng Qiao, of Jun He Law Offices, said: “This partial reversal of the burden of evidence will make it easier for courts to ascertain the crime of money-laundering.”
Ehrlich said it would not be surprising to see more convictions for money laundering in the future.
“From the Interpretation, we can sense a clear signal from the Chinese government that it is very serious on its anti-money laundering initiatives,” he said.
Between 2002 and 2006, said Ehrlich, there were 151 convictions for money laundering in China, as compared with 1,075 in the US in 2005 alone.
China does not have a single law dealing with money laundering. Instead, one must refer to several separate Articles of the PRC Criminal Law. Each describe the “physical elements” (i.e. actus reus) which need to be proved in order to convict a defendant of money laundering, but there is limited guidance. The new court Interpretation also gives examples of types of concealment which could satisfy the test: “using illegal proceeds” in pawning and other investment arrangements; business operations; document fraud; purchasing lottery tickets; gambling; and transporting illegal proceeds across the border.
Peng pointed out the addition of clarifying comments related to the carrying out of terrorist activities and of “providing financial support” to terrorist organisations.
“With the supplemental examples provided by the recent Interpretation, China has made it clear that for a conviction of money laundering offence, the proceeds of a crime could be anything of a monetary value, and financial institutions are not the only ones vulnerable to money laundering activities,” said Ehrlich.
For foreign companies involved in legal financial conversions in China, the Interpretation makes it even more important to make sure that every transaction is based on a real, non-criminal foundation. Peng encouraged companies to keep sufficient evidence in case they are implicated in any money-laundering investigations.
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