Risk‐based AML regulation on internet payment services in China

Abstract

Purpose

The purpose of this paper is to reveal the money laundering vulnerabilities of internet payment services, to analyse the key elements of conducting risk‐based approach (RBA), and finally to provide recommendations of apply RBA to anti‐money laundering (AML) regulations on internet payment services in China.

Design/methodology/approach

This paper analyses the characteristics of internet payment systems, introduces the latest arrangements associated with the third‐party payment services and payment and settlement system in China, and provides case of Alipay to illustrate the importance of carrying out AML regulation on Chinese internet payment industry.

Findings

The internet payment industry in China is increasingly booming, but the regulation in this field is obviously lagged. Recent regulation arrangements published by the People's Bank of China present the determination of Chinese Government to put the third‐party payment industry (including internet payment service) under the national AML regulation.

Originality/value

This paper highlights the money laundering vulnerabilities of internet payment services in China and recommends that AML regulation on internet payment services should focus on “back‐end” account controls on the basis of risk‐rating practice.

Citation

Yan, L., Ai, L. and Tang, J. (2011), "Risk‐based AML regulation on internet payment services in China", Journal of Money Laundering Control, Vol. 14 No. 1, pp. 93-101. https://doi.org/10.1108/13685201111098905