China risks overlooking sources of terror funding: analyst

• Staff Reporter
 
• 2014-07-19

A bank in Nanjing displays slogans against money laundering and financing terrorism. (File photo/CFP)

BC Tan, Thomson Reuters' head of research for the Asia-Pacific, warns that Chinese government may overlook sources of funding for terrorist groups if it only monitors money laundering. He also suggested the government establish a database and operating system that can identify accounts involved in financing terrorist activities, reports Guangzhou's 21st Century Business Herald.

Tan said in an interview with the paper that many countries and UN-related organizations have set up laws to step up monitoring on how international terror is funded. The Financial Action Task Force, an inter-governmental body tackling money laundering and terrorist financing, plans to divide countries into two categories according to whether they can set up an effective anti-terrorist financing monitoring system. The UN, World Bank and IMF will assist countries that do not have the ability to do so.

Chinese banks face the same issues as their counterparts around the world in this aspect, such as setting up a database and system that can identify suspicious accounts, training professionals to monitor the financing of terror groups and changing the bank's operating culture, Tan said, suggesting that international cooperation will help.

Not all money that goes to funding terrorism is done though money laundering, Tan said; UN research shows that around 30% of funds was obtained through legal channels such as donations or trade. Smaller transactions should also be monitored since they are easier to overlook and not all terrorist activities required large sums of money, he added.

Banks should include all accounts connected to the funds and transactions of a suspicious client in their monitoring system and track every single payment to stop terrorist activities in a timely manner, Tan said.