approval of the state council, the pbc has formally written to the fatf in april this year and applied for a membership in the fatf. meanwhile, china has contacted the preparatory committee of the euro - asia group on aml and combating terrorist financing ( eag ) through various channels. the pbc and the ministry of public security participated in the preparatory meeting of the eag on aml held in russia in june 2004. china will make efforts to become the initiating member of “ the eag ”. making full use of international resources in beefing up in staff training constitutes an important part of the international aml cooperation of china. in recent years, the pbc, the ministry of public security and the safe, in collaboration with the international organizations like the un, the world bank, the imf and the fatf, have held a series of seminars and training sessions. in the first half of 2004, the pbc, jointly with related agencies and international institutions, organized four aml seminars and training sessions, providing technical support for aml work in china. iv. prospects for aml in china generally speaking, the situation of aml is good. the relevant aml policies and measures have taken effect. the coordination and working mechanisms at various levels have been brought onto the right track. and with the deepening of aml work, the effects will unfold further. as aml is an important while arduous task that influences the overall society, all members of the joint conference shall collaborate with concerted efforts in doing well the following work. 1. continuing to reinforce the coordinating mechanism of aml efforts shall be made to continue to carry out directives by the central committee of the cpc and the state council on combating corruption, advocating honest and clean government and fighting economic crimes. in order to effectively fend off and crack down on crimes of money laundering, to safeguard the national economic and financial security and normal economic order, the ministerial joint conference on aml will, under the leadership of the state council, be responsible for guiding the national aml work, drawing up the important national aml principles and policies and the policies and measures for international aml cooperation, and coordinating all departments and mobilizing resources of the whole society to carry out aml work. as the leading ministry of the joint conference, the pbc will commit to strengthening research on aml policies and measures, improving management on aml, reinforcing supervision on aml of financial

, aml is a necessity for relentlessly cracking down on economic crimes. at the start of reform and opening, mr. deng xiaoping pointed out that, fighting economic crime “ is a long - term continuous struggle, ” is a protracted task calling for perseverance in the course of china ’ s modernization construction. with the deepening of marketization of china ’ s economy, such crimes as smuggling, tax evasion, tax rebate cheating, financial frauds, market manipulation and insider trading are on the rise. the above crimes are catalyst to corruption like embezzlement and bribery taking, severely damaging the health of national economy and corroding social and public morality. a sound practice in aml will enable an effective monitoring of abnormal and suspicious fund movement, generate opportunities for controlling the transfer and hiding of the illegally obtained gains and provide effective means for recovering illegal funds transferred abroad, so as to fight economic crimes effectively. third, carrying out aml is a necessity for forestalling other grave criminal crimes. with china ’ s opening wider to the outside, international narcotics crimes and organized crimes with the nature of underworld have picked up. in some part of the regions, there emerged the symptoms of terrorist crimes by a small handful of extremists and separatists, creating grave social problems. experience at home and abroad suggests, the severe crimes are not possible without enormous financial support and therefore often entail frequent money laundering. cracking down on money laundering and spotting and cutting off the funding chains on which crime organizations rely, will forcefully weaken, break up and disintegrate the criminal activities, strictly forestall them from spreading and realize ultimately the targets of combating crimes, protecting the fundamental interests of the masses and safeguarding social stability. fourth, a sound practice in aml is also a necessity for safeguarding the credibility of financial institutions and the financial stability. money laundering is basically divided into three steps, placement, covering up and integration. first, placement, i. e. placing unlawful proceeds into the economic system, mainly the financial institutions. second, covering up, i. e. covering the origin and blurring the nature of illegal funds through complex transactions. third, integration, i. e. using “ laundered ” funds legally. the above features indicate that financial institutions, as the carrier of funds activities, are objectively prone to become the channels for money laundering. involvement of financial institutions in money laundering, will not only damage the reputation of the financial